Burnham proposes plan to cut standing charges from gas bills

Andy Burnham proposes plan to cut standing charges from gas bills

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Burnham proposes plan to cut standing charges from gas bills

Image source: Getty Images

By Tom Espiner, Ben King, Business reporters, and Kevin Peachey, Cost of living correspondent

Published 2 hours ago

Prime Minister Andy Burnham has asked ministers to develop a plan to remove standing charges from gas bills. These are fixed daily fees covering connection costs, which vary by region, and households must pay even when energy is not used.

Industry body Energy UK stated that the impact of the proposed changes on bills depends on how the charges are reallocated. An influential research foundation argued that this move would be progressive, aiding low-income households and reducing a typical annual bill by £27.

During Prime Minister's Questions, Burnham suggested that approving the Jackdaw gas field in the North Sea would enable increased investment in renewables and help with bills. He requested the Chancellor John Healey and Energy Secretary Miatta Fahnbulleh to consider removing gas standing charges and report back to Parliament.

Practical details have not been disclosed. Nesta, a research firm, has proposed shifting these charges to the unit rate, potentially benefiting low-usage customers but potentially increasing costs for heavy users.

Regulator Ofgem has been consulting on standing charges for two years, receiving extensive public feedback, including opposition from low-energy users. They are currently running a pilot scheme on low standing charge tariffs, with no conclusive results yet.

Standing charges cover infrastructure costs, including transporting energy and maintaining it. They also fund schemes to aid low-income households. Citizens Advice warned about potential consequences for vulnerable customers, as high-usage, low-income individuals could be affected.

Madeleine Gabriel, director of sustainable future at Nesta, stated, "Abolishing the gas standing charge and moving those costs onto the unit rate would help those worst hit by rising energy prices."

Pressure remains on the Chancellor to provide more targeted energy support in the upcoming Budget, with forecast energy price rises of 16% in January.

In addition to standing charges, Burnham emphasized investing in renewables, aiming to reduce household bills "substantially" by breaking the gas-electricity price link "in this parliament."

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