Off the Fence: Ofgem and government need to get smart on energy pricing | Penny Mordaunt MP

Over the years I’ve paid for energy in a variety of ways.

By Penny Mordaunt
Tuesday, 24th May 2022, 3:44 pm

I now have a direct debit and a smart meter. Previously I’ve used prepaid keys. In one property I fed a gas fire metre with old 50p pieces, which were no longer legal currency, which I bought from the landlord.

I understand why paying for energy as you go is a weight off people’s minds. You know you aren’t going to rack up bills and you know how much you have left before you top up.

But prepaying is usually a more expensive than paying by direct debit.

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Woman At Home Boiling Kettle For Hot Drink With Smart Energy Meter In Foreground. Daisy Daisy - stock.adobe.com

If you have an old-stye credit meter you might want to consider getting a smart meter. There is no upfront charge for the installation.

Your energy provider will recoup costs through your bills over time. You can find out more about this from your energy supplier or the citizens advice bureau.

Whether you choose a credit or pre-payments system energy suppliers and government should be looking to find ways to reduce soaring costs.

I am asking the Government to consider a better way of structuring what is known as the standing charge.

Defence secretary and Portsmouth MP, Penny Mordaunt. Picture: Victoria Jones/PA Wire

This is a charge that everyone pays just to be connected to supply. It is roughly 28p per day or nearly £9 per month.

That means even if someone isn’t using any energy they still have to pay. If we also want to see the uptake of smart meters, we ought to consider if the costs of doing so are a barrier for some.

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There are a number of schemes to help with energy bills, from the Winter Fuel allowance to the Warm Home discount as well as the measures the Chancellor recently introduced.

Energy prices will remain high, so we need to think about what more we can do over the long term. Increasing supply is one thing, but there will be others too and we should look at encouraging companies to develop their tariff offer for vulnerable customers.

The regulator Ofgem is looking at how it can use its powers to make the market fairer. However, their proposals have come under criticism.

The potential consequences of their suggested changes would mean it would be harder for firms to launch cheaper deals for customers. It looks like they are trying to stop firms undercutting the price cap.

How is that helpful to hard pushed bill payers?

I want to hear from you about what would be of most help and I will continue to push for a more innovative long-term solution to give everyone confidence that they can enjoy a warm home.