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Why has the Standing Charge on my electricity bill increased so much?

Discover the impact of the Targeted Charging Review on energy costs. Understand changes in standing charges due to Ofgem's new scheme for distribution and transmission costs.

Why has the Standing Charge on my electricity bill increased so much?

This week we had an enquiry from a client questioning why their standing charge was due to increase so much upon their next renewal. They raised concerns of any ‘hidden commission’ in their standing charge as they could not understand how the standing charge had gone from £65 per month to £570 month.

The unfortunate reality is that this client is feeling the full impact of the Targeted Charging review or TCR. A new scheme introduced by the energy regulator Ofgem, which has changed the way that suppliers are to be charged for Distribution and Transmission Costs and in turn the way they pass these charges onto their customers. The costs of energy distribution and maintaining the transmission network have largely been removed from the unit charge and built into standing charges.

Electricity supplies have now been arranged into Bandings based on a number of factors including supply size and location and, if it’s a Half Hourly (HH) supply, Authorised Capacity (KVA). While standing charges on all supplies will increase, if your meter is categorized as a Band 3 or 4 or has a high authorized capacity then your increase in standing charge is likely to be even more significant.

The change in way that Distribution costs are levied has been phased in since 2021 with each supplier taking their own approach but the Transmission charges came in in full force in April 2023 - precisely when our client was due to renew their contract. They have been in a fixed prices contract since 2021 so had avoided all the extra charges until now. With a high Authorized Capacity of 200 KVA at a site in the most expensive North of Scotland Distribution area, their supply is classified as a Band 3 and the increase as a result is hefty.

How can Here’s the Plan help?

As with any new industry wide changes there are inevitable inconsistencies and mistakes in Banding allocations. We have been working hard to best understand how to identify these mistakes and create a service which will tackle these issues. We can check that your supply has been categorised correctly and if it has not been, challenge it to help your business avoid excess charges.

If you are one of the fortunate businesses still in a contract agreed pre 2021 we can forecast your likely standing charges at renewal so that you can be prepared and budget for these incoming increases.

If you would like your Standing charge reviewed, need any advice about the impact of TCR or anything else energy or sustainability related ontact the team at Enable JavaScript to view protected content.

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