Unfair charges: How older people on a low income are affected by energy standing charges

Policy Officer James Evans explores how we’re calling on the Government and Ofgem to support older people living on a low income with their energy bill standing charges.

At Independent Age, we believe that no one should have to live in a cold or dark home due to unaffordable energy bills. Energy standing charges are having a big impact on older people on low incomes, and we think the system needs to change. That’s why we responded to two important consultations from Ofgem and the Energy Security and Net Zero Select Committee on this topic, using the evidence older people shared with us about their experiences and opinions. We’re so grateful to everyone who shared their views with us.

You can read our full submission to Ofgem here and our full submission to the select committee here.

Energy Standing Charges

The energy standing charge is a fixed daily cost which customers pay, even on the days they do not use gas or electricity. Currently, the average standing charge for a household in the UK is around £300 per year. This is a substantial amount of money which everyone has to pay, including those who told us they were making cutbacks on their energy usage.

As part of our submissions, we ran a survey to understand older people’s thoughts and experiences of managing standing charges. In this survey, 92% of older respondents on a low income said that it was ‘not fair’ that households with low energy usage had to pay the same amount in standing charges as higher usage households.

“A fixed charge which is out of proportion to the amount of energy you use is decidedly unfair, and discriminatory, discriminating against those who use less energy and who are, most likely, those who can least afford it.” Dave, 75

Of the older people on a low income that we surveyed, 81% told us that some or all of the cost of the standing charge should be factored into the unit rate of your energy. This would mean the amount you pay in standing charges is more closely related to the amount of energy you use. However, it’s important to be clear that most people who responded to our survey felt that households with essential high use, such as those with electronic medical equipment should have additional protections against high costs.

“People using the most should pay the most, unless they have special circumstances e.g. they are disabled or have disabled person in the household, in their case they should not be charged the standing charge at all.” Carol, 69

We believe that Ofgem should carefully examine which parts of the standing charge can be factored into the unit rate of someone’s energy, rather than a flat charge for each household. Ofgem should also consider the impact of this change on different groups, such as those on low incomes including older people and those with high essential energy usage, including for medical reasons.

The impact of standing charges

Many older people living on a low income told us how they reduce their energy usage in an attempt to cover the cost of their standing charge. These are not energy efficiency savings; these are older people cutting their energy usage to dangerously low levels.

In our survey, we asked respondents about their energy use in the previous three months. We found that, in that period, 77% of older people on a low income had reduced their heating usage to help manage the cost of their energy standing charge, and, concerningly, a further 14% had not turned their heating on at all. Additionally, 47% had reduced their non-heating electricity, and 23% had been eating more cold meals in an attempt to save on energy.

“I am cold all the time. Have cut back on food, washing and laundry, and still can’t pay my electricity bill which keeps going up.” Anonymous

“I sold my car and now use public transport so that I can afford to pay my electricity bill.” Sara, 79

These reductions in energy usage can have a severe knock-on effect on the physical health of older people who are struggling to meet their energy bills. Many older people told us how energy cutbacks had affected their mental health and wellbeing, leaving them feeling worried, stressed and depressed.

“Life is miserable in winter.” Anonymous

“It is affecting my mental state.” Anonymous

Standing charges protections

We believe there should be more support available if you’re living on a low income, and unable to afford energy, or have a disability or health condition which means you have to use more energy.

In both consultations, we suggested several ways to protect these customers, alongside our recommendation for Ofgem to examine the fixed costs that make up the energy standing charge.

We believe Ofgem should consider the introduction of a cap or exemption to the standing charge for those with higher essential energy usage and for those on a low income — something that 48% of older people on a low income supported.

Another way to protect older people in financial hardship would be for the UK Government to introduce an energy bills social tariff. Put simply, such a tariff would reduce the cost of energy for those in greatest need, including older people on a low income. An energy social tariff could have a huge impact on the lives of those living in poverty and be a long-term solution to unaffordable energy bills. 61% of older people agreed that the UK Government should introduce an energy social tariff, and that eligible households should be exempt from paying the standing charge.

Next steps

We hope that our submissions ensure that Ofgem the energy regulator and members of the Energy Security and Net Zero parliamentary select committee hear from the voices of older people on low incomes and take the action necessary to tackle the negative impacts of energy standing charges.

We will continue to monitor not just these submissions, but any others released so that we can continue to amplify older peoples’ voices and make change happen.

You can find out more about our research on rising household costs and their impact on older people in financial hardship by going to our website.

If you need information on ways to boost your income and cut costs there is information and advice on our website. Or you can always contact our free helpline on 0800 319 6789.

If you want to help us change the systems that are letting down older people in financial insecurity, you can join our Campaigns Network to receive regular emails about what we’re up to and how you can get involved. If you have a story to share about high energy costs, we really value hearing them. Just contact our campaigns team by emailing campaigns@independentage.org.