North Wales and Mersey homes face highest average energy costs nationally according to latest report commissioned by National Energy Action.

A new report released on, March 30, warned standing charges have reached a new high.

The new level of the Ofgem price cap for energy, which came into force on 1 April, will result in the highest standing charge for energy customers, since the Ofgem price cap was introduced in 2019. It’s an increase of 50%. 

However, North Wales and Mersey homes may face an even higher cost. 

Head of Wales at National Energy Action Ben Saltmarsh says: “We’ve been spared a £500 increase to the Energy Price Guarantee, which will remain at an average of £2,500 a year from 1 April.

"However, energy standing charges are set to increase to a new high on April 1 – in north Wales, higher than anywhere else in GB – which has a very detrimental impact on low-income, prepay users especially.

“Standing charges are a fixed, daily amount you must pay, no matter how much energy you use. There’s a big regional divide in unit rates and electricity standing charges.

"All told, those in north Wales and Mersey continue to face the highest average costs in GB, with prepay standing charges now more than £380 a year (incl. of VAT) before you’ve even used a single unit of energy.

"Standing charges for households in this region have increased by almost two-thirds since Ofgem’s price cap came into place in 2019.

“This makes life harder for low-income and vulnerable households, who cannot afford the cost of a warm home. And it often hurts prepay customers the most. They’ll simply get less energy for their money and cut back further.”

The reason why the standing charge is higher in North Wales and Mersey is that electricity network charges vary by region and reflect the costs of running the network in that area and the number of consumers that those costs are spread over.

The number of UK households in fuel poverty is set to increase from 6.7 million to a new high of 7.5 million from 1 April, according to National Energy Action’s figures. 

However, in Wales that is likely to include over 45% of households in Wales (over 600,000 households), incl. all our lower-income households, many of whom find themselves in deep, severe fuel poverty.

 The Government are keeping the Energy Price Guarantee, keeping the annual bill for typical households at £2,500.

However, as well as the standing charge increase, the Government is stopping the Energy Bills Support Scheme payments of £67 a month, meaning energy bills will increase by 40% a year. 

The report, written by David Osmon, concludes that: 

  • Low-income households spend less on energy so a higher proportion of what they pay goes on the standing charge and buys them no energy 
  • The lower spending of households with low incomes means that having to pay higher standing charges constitutes a significant cost increase that accentuates the effect on the amount of energy they can buy.  
  • A standing charge of £350 per annum accounts for 41% of what those in the poorest 10% of households have available to spend on energy and leaves them with only £508 worth of gas and electricity every year. 

Adam Scorer, chief executive of fuel poverty charity National Energy Action (NEA) says: "For years, the standing charge has been growing. It makes life worse for low-income households who cannot afford the cost of a warm, safe home and have no choice but to cut back on their energy consumption. 

 "Despite the UK Government’s recent commitment to freeze the level of the Energy Price Guarantee (EPG) from 1 April, standing charges will reach record levels. The regulator controls how costs are passed through to consumers. We know that low-income households lose out the most from its default approach to standing charges. It is high time for change." 

In the Budget on 15 March 2023, the UK Government announced that from July 2023 to March 2024 it will compensate prepayment customers for the additional cost (i.e. the higher standing charges) they face relative to those who pay by direct debit. This will cost the taxpayer £200 million.  

However, prepayment customers still have to pay this extra for the three months until July; standing charges will remain very high for all consumers; and it is unclear what will happen from April next year.

The author of the report says the current approach leaves more than 13% of the typical dual fuel energy bill being unavoidable. Even desperate efforts to slash virtually all households use of energy aren’t enough to stop prepayment meters from racking up increasing daily charges.

The increases to standing charges also coincide with the end of the UK Government’s Energy Bill Support Scheme rebate from 1 April which provided a £67/month payment for all households, effectively covering their standing charges for the winter.