Octopus Energy (Octopus) has rolled out a £40m package to lower the burden of standing charges facing households this winter.
All Octopus customers on standard variable tariffs will receive a four per cent reduction in standing charges compared to Ofgem’s current rates.
The Big Five energy firm will also allow up to 100,000 customers to apply for “standing charge holidays” of up to six months.
This is alongside the price cap freeze announced by the Government, which has frozen the energy price cap at £2,500 per year.
Greg Jackson, chief executive and founder of Octopus said:“High standing charges are egregious. This £40m package is the beginning of our battle to bring them down. Far too many costs have been loaded onto standing charges – from grid and distribution charges to failed suppliers. These charges just make it more difficult for hard-pressed customers to save money through efficiency and Octopus is making a stand to change that.”
The standing charge is a set daily amount established by Ofgem that Brits have to cough up, regardless of how much energy they use.
It covers the cost of supplying the property with gas and electricity, alongside the clean-up bill from the market crisis that saw 30 suppliers collapse over the past 12 months.
Standing charges are contentious and have faced criticism from charities such as Citizens Advice as they add hundreds of extra pounds on to the bills of vulnerable households who use little to no energy.
Ofgem has revealed standing charges will rise to an average rate of 28p for gas and 46p for electricity per day when the new cap comes in next month – a slight increase on current levels of 27p and 45p respectively.