A programme calculated to save the average household feeding a pre-payment electricity meter (PPM) the princely sum of £40 per year has been launched by energy settlements platform Elexon.
Power retailers use standing charges to recover their fixed costs in supplying customers, similar to the role played by line rental in telecoms supply contracts.
Fixed costs faced by suppliers in respect of PPMs tend to be higher than for credit or direct debit payment plans, not least because retail supply companies have to pay shops to offer top up services.
Since early October, power retailers have been discounting standing charges for PPM tariffs by around 5 pence per day per fuel, on average across all suppliers.
Elexon’s innovation sees them making two payments to suppliers, reimbursing them for the cost of subsidising the reduction. Settlements will be made in January 2024, for the October to December quarter of this year, and then in March, for costs incurred during 2024’s first three months.
The standing charge discount scheme will be in effect until 31 March 2024.
In the longer term, Ofgem is looking to devise an long-lasting reform to levelise standing charges for PPM and direct debit. The regulator is consulting on how to achieve this by April 2024 to coincide with the end of the government’s Energy Price Guarantee,
Elexon chief executive Peter Stanley, said: “Energy affordability remains a key issue for consumers and we are pleased to be playing an important role supporting those most in need. We are also trusted to deliver a growing number of important schemes that underpin the energy transition, reflecting our expertise in wholesale electricity markets.”
For customers paying for gas through PPMs, Xoserve will be administering an equivalent programme.