High standing charges are egregious says Octopus Energy boss

Octopus Energy’s boss has labeled ‘high fixed costs’ on household gas and electricity bills as ‘outrageous’.

Greg Jackson says, “Far too many costs have been poured into overheads – from grid and distribution costs to failing suppliers.”

Rising fixed costs have been a controversial topic since the onset of the energy crisis.

It is a fixed daily amount on the energy bill that must be paid and covers the costs of supplying homes with gas and electricity.

Even if usage is limited, this flat fee remains the same, making it “more difficult for customers who have a hard time saving money through efficiency,” said Mr. Jackson.

Octopus has now launched a ‘battle against permanent charges’, as part of a £40 million package.

All customers with its standard variable rate – Flexible Octopus – automatically receive a 4 percent discount on fixed costs compared to Ofgem’s rate cap.

Typical fixed costs range from 5p to 60p per day for electricity and 10p to 80p per day for gas.

The average daily rate for dual fuel customers paying by direct debit will be 46.36p for electricity and 28.49p for gas, including VAT, as of October 1.

Earlier this year it was 25p for electricity and 26p for gas. In July, an energy campaign group called for the elimination of fixed charges on electricity and gas bills altogether.

Fuel Poverty Action said in July that more than 80 percent of people supported the abolition of the standing charge.

The charity also wrote to industry regulator Ofgem, saying the additional costs were a “grotesque injustice.”

Ruth London of Fuel Poverty Action said: ‘It is unfair to put more and more on the bill that no one can avoid, no matter how little energy they use.

“The permanent charge is a bull’s eye for people who have reduced their energy consumption to the bone, but still face heavy daily burdens.”

Since then, the new Prime Minister Liz Truss has unveiled measures that will limit energy bills under normal use to £2,500 a year from 1 October, including the fixed cost cap mentioned above.

Bills are frozen at this level for two years under the energy price guarantee.

Octopus says 100,000 customers with the greatest need can also request a “real estate vacation” of up to six months. This allows them to benefit more from energy savings.

It says the £40 million will be diverted from operational efficiency and by cutting advertising and sponsorship.

Mr Jackson added: ‘This £40m package is the start of our fight to bring them’ [standing charges] down.’