Electricity: Standing Charges

(asked on 17th March 2022) - View Source

Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, pursuant to the Answer of 28 February 2022 to Question 128235, on Electricity: Standing Charges, whether it is his Department's understanding that the increase in the daily standing charge element of the April 2022 energy price cap is partly being used to cover the cost of energy firms still operating taking on consumers from energy firms which have stopped trading; and whether he has had discussions with Ofgem on that matter.


Answered by
Greg Hands Portrait
Greg Hands
Minister of State (Department for Business and Trade)
This question was answered on 22nd March 2022

Costs incurred when customers are moved to a new supplier from a failed supplier are split between the receiving supplier and a levy on industry as a whole. The levy compensates suppliers for the unrecoverable costs of taking on customers, such as purchasing additional wholesale energy, and it is funded from gas transporters and electricity distributors Use of System charges.

The standing charge element of consumer bills reflects some of the fixed costs of supplying energy, including gas and electricity system costs. In the April-Oct calculation of the price cap Ofgem have increased the distribution cost allowance, driven mainly by an increase in the industry levy caused by exceptional global wholesale energy prices.

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