Chris O'Shea - Changes are needed to make the energy sector simpler and more transparent

Tomorrow, thankfully Ofgem will lower the energy price cap, because the overall cost of energy is coming down.

With inflation high, and mortgage holders feeling the strain from rising interest rates, it’s great to see energy costs are at last heading in the right direction. In fact, bills for our customers this year will be £2.5 billion cheaper than last year.

We can now turn our attention to building a better energy system which works for the millions of households across the UK. As the nation’s largest energy provider, with 7.5m customers, we are uniquely placed to provide insight on how we make energy simpler, and more affordable, for everyone.

During the energy crisis we’ve supported tens of thousands of customers who need it most. We’ve spent over £75m supporting our customers through our £50m voluntary contributions to assistance funds and investment in customer service.  That’s tens of millions more than any other energy supplier – and we’ll be announcing tens of millions more support in the next few weeks. Because we’re here when our customers need us.

Existing energy bills are way too complicated – we’ve got to change that. Any customer should be able to pick up their bill and easily understand how it is calculated, and how they can get help if they need it. It should be simple and straightforward. There are three things we want Ofgem and the Government to change to make the system more affordable, fairer and easier to understand.

That’s why we think it’s right to abolish the standing charge from the price cap. This will go a long way to streamlining bills and making them more transparent. We think it’s really unfair that many customers have no option but to pay a fixed charge per day for their energy, regardless of how much energy they actually use. The standing charge hits people who are careful about their energy use hardest – and these people are often from low-income households, and prepayment meter customers in particular. I know from conversations with prepayment customers that the standing charge can see them unknowingly building up debts over the warmer summer months. So why don’t we simply get rid of this charge and roll the costs into the unit cost of the price cap instead, then those who more carefully manage their energy use could see really big benefits.

Customers also currently face a postcode lottery of regional energy pricing. This means for example that someone in London or Leeds will be paying less for their energy than a customer on the same tariff with the same usage in Liverpool or Edinburgh. Moving to a flat national pricing tariff – which is the same wherever you live in the UK – removes further unnecessary variations from bills. The impact of this change would need to be carefully studied but we think it’s something the regulator should look at.

Finally, we need to take the opportunity to implement a progressive social tariff so that those who most need additional support to pay their bills can receive it.  We can’t have a system where the rich get as much support paying their energy bills as the poor – that is just plain crazy. The introduction of a social tariff should be a game changer for consumers who are struggling with energy costs, food bills, higher rent, and soaring mortgage rates.

The last few years have shown us that we need to make changes. This is a crucial issue for millions of households. We need other suppliers, distributors, regulators, and the Government to come together, work with us, and help us make these reforms a reality.