Consultation Response: OFGEM

OFGEM are responsible for the energy price cap and setting the rules on energy tariffs. They recently published a consultation to get people’s views on whether they make it a rule that energy companies should have to offer tariffs which have a lower standing charge. The standing charge is the amount of money you pay every day to get electricity and gas into your home. The other part of your bill is called the unit price which is money you pay for each kilowatt hour of electricity or gas you use.

We know from our members that energy bills are the most difficult bill to pay and because of disabled people’s impairments there are additional costs which people have to pay. Once we saw the consultation had been launch DES decided to answer the consultation. All the quotes used in our response are from members. We used previous research data to gather these quotes as we wanted to respond quickly and we didn’t feel it was right to ask members the same questions over and over again in this instance.

Our full response is outlined below. If you have any questions please do contact us on research@disabilityequality.scot

Q1.  What are your views on our updated case for change on lower standing charge options?

In principle we agree that standing charges are too high and penalise consumers as set out in paragraph 2.18 of the consultation paper. Our own research with Disabled people found that the current standing charge regime was “outrageous” and they were “far too high and unjustified”. We agree that consumers must have greater choice on the tariff options available including a zero standing charge tariff. However, the proposed updated case for change says that OFGEM would increase the energy unit price instead of charging a standing charge. This is flawed to a degree because this will penalise high energy consumers and by extension disabled people, who often need to consume more energy to heat their homes and run independent living equipment. If OFGEM want to remove the standing charge it should do so via abolition and not roll it into the energy unit price.

Disability Equality Scotland believes that the best lower standing charge option would be to integrate this into a social tariff for disabled people, older people and those on low incomes.

Q2. Do you agree with our policy objectives and intent for requiring lower standing charge tariffs?

We agree that all regions need to have a lower standing charge offer and the principle that consumers must be fully in control of their energy consumption decisions; the proposed policy intent and objectives are reasonable.

Q3. Do you agree with our proposal to require suppliers to offer a tariff with a standing charge £150 below the nil consumption price cap level? Do you have any views on whether we should require a higher reduction?

OFGEM’s proposal to mandate a low standing charge tariff rather than a zero standing charge tariff is disappointing. While balancing the needs of suppliers from a disabled consumers perspective our previous research showed that disabled people would rather see the complete abolition of standing charges but failing this these charges need to be reduced and creation of a “ceiling” for standing charges would be a step forward.

The proposed £150 reduction in standing charges is a positive and we would encourage OFGEM to go further with a view to abolition of standing charges. Any proposed methodology for reduction of standing charges must take into account the energy needs of disabled people due to additional costs induced by impairments and the running costs of independent living equipment. Where an individual is on the priority service register or is a disabled person, we would encourage OFGEM to introduce a social tariff which includes a reduced standing charge which helps to reduce the energy bills for the specific consumer.

Moreover, it is noticeable that the bills faced by disabled people in Scotland are much higher than in other parts of the UK due to transmission charges and how energy is generated; to help reduce the standing charges we would urge OFGEM to carefully consider the case to significantly reduce transmission charges in Scotland given that a large quotient of power generated is by renewable means rather than from oil and gas and this should be applied across the UK. Therefore, it would be sensible for OFGEM to ensure that any new standing charge arrangements take this into account as it is not fair on consumers that their energy bills are linked to the price of gas when the tariff used by the individual consumer is based on energy generated via especially renewable sources.

Moreover, many disabled people use independent living equipment to help them survive or to maintain their independence. The proposed change to low standing charges doesn’t help mitigate the fact that when we asked our members how much extra it cost each month to run the equipment they need:

• 43% say it costs a lot;

• 26% said it costs some money;

• 15% said it costs a little.

This has created an “impairment energy penalty” faced by disabled people where they have to make a choice between keeping warm and using their independent living equipment. In 2025, our household finances survey found that 27% of respondents have had to make this choice. We asked what actions people had taken to mitigate the “impairment energy penalty” and their responses were harrowing.

“I’ve not had my equipment serviced for save costs and I have stopped going out as much so I don’t need to recharge my power wheelchair as often.”

“I am reliant on 4 air purifiers, 2 dehumidifiers and electric heating, all of which I am having to limit to save money at the significant detriment of my health.”

“Not seeing family or friends or going out as often to reduce the use of my powered chair to try and reduce energy bill.”

We would encourage OFGEM to as part of any tariff reform ensure that the regulatory environment does not penalise disabled people and eliminates the “impairment energy penalty.”

We would be open to a greater reduction beyond £150 in standing charges below the nil consumption price cap level provided that this is financially sustainable. Previous DES member surveys have found that there is a perception that suppliers have had huge profits which have been generated due to the high costs borne by consumers during the cost-of-living crisis. One member in particular commented:

“Every business is out to make a profit and has every right to charge. However, when I see the profits made by the energy companies, it’s time they reduced charges.”

Our view is that any amendment to the mechanisms for offering a no-standing charge tariff or a lower standing charge tariff should be linked to the costs to generate energy but not rolled into the unit cost per kilowatt hour as this would penalise disabled people whom already face significant challenges in heating their homes.

Q4. Do you agree with our proposal to require the tariffs to be offered to all payment types and both smart and traditional meter consumers?

We think the tariffs should be offered to all payment types covering households across the UK, irrespective of meter type.

Q5. Do you agree with our proposal to allow suppliers to limit eligibility for lower standing charge tariffs to consumers that meet a minimum consumption threshold?

We would agree that there needs to be a minimum consumption threshold applied where a property is vacant or derelict but suppliers should not be able to limit low standing charge tariffs where it is someone’s primary residence. Moreover, where someone is in receipt of a disability related social security payment or the priority register they should automatically quality for the lower standing charge tariff.

Q6. Do you have views on our methodology for setting a minimum consumption threshold?

In setting the baseline for this it cannot penalise low energy users whom are on low incomes or in receipt of disability related social security payments. Hence, there should be no minimum consumption threshold used when determining if someone qualifies for a lower standing charge tariff.

For all other consumers we agree that the minimum consumption threshold as set out in the methodology should apply. Similarly, no person on a pre-payment meter should be penalised under the methodology.

Q7. Do you agree that the licence conditions should include a threshold for suppliers  to be eligible? If yes, would 50,000 domestic customers be a suitable threshold?

We have no comment to make.

Q8. Do you agree that the licence conditions should be time limited? If yes, would a 2-year period be suitable?

We are unable to answer this question.

Q9. Do you have any further evidence on the overall costs of implementing tariffs  that meet the new requirement and any ongoing compliance costs?

We are unable to answer this question.

Q10. Tell us about your views on our consumer protection approach and compliance considerations.

When consumers make decisions about their energy usage and choices they must always do so in an informed way. To help people to make informed decisions we would strongly encourage OFGEM and the FCA to develop a rule which requires suppliers to communicate with disabled customers using inclusive communication methods in line with the Principles of Inclusive communication. An example of this would be bills being presented in Easy Read and using Accessible Numbers.

We would agree with the proposed approach regarding SLC-25 and we would make it a requirement that a social tariff or reduced standing charge tariff is offered to persons on the priority register. Where someone is on the priority register, we would seek to ensure that OFGEM uses its regulatory oversight powers to ensure that suppliers ensure that disabled consumers and others on the priority register are on the lowest possible standing charge tariff or social tariff.

Q11. Do you have any views on our proposed principles for reasonable pricing for these tariffs?

We recognise the principles contained in the consultation paper to ensure reasonable pricing. The proposed model of taking demographic impacts into the calculation of unit cost means that rural communities and where disabled people live will directly impact on the unit rate they pay. This could be viewed as unfair to particular parts of Scotland and the wider UK. We accept that companies under paragraph 6.6 should be able to take into account the costs of supply and comparative tariffs and their respective costs. We are concerned that under OFGEM’s proposal that suppliers can take into account “any other relevant matter” because it lacks clarity and does not define what would be considered “relevant” thus it is anticipated that a reasonable person test is the very minimum OFGEM would need to apply when seeking justification from suppliers on their unit prices.

At present disabled people experience an impairment energy penalty due to the costs of running their independent living equipment and managing their conditions/ impairments. Having previously undertaken work for the Scottish Government around the issue of a social tariff we sought to learn the experiences of disabled people when accessing and paying their energy bills. Comments included:

“[S]top holding onto people high credit direct debits for your own profit and stop overflating prices when going onto a standard tariff from a flexible tariffs absolutely outrageous.”

“It is ridiculous that in this day and age in one of, if not the most energy rich country in the world that we are also one of the most expensive and older and disabled people are dying in the winter because we can’t afford to heat our homes and eat at the same time.”

“My energy costs are high as I feel the cold – a contribution to offset this would be most appreciated.”

“Suppliers are quick to take your money but slow in helping.”

“It’s time that standing charges were abolished and those people who have to use disabled equipment to live and get around be supplied with discounted energy tariffs.”

These experiences shows that current pricing models aren’t working for disabled people. The proposal of reducing standing charges is welcome but if this is rolled into the unit price then there is no real terms reduction in a household’s energy bills.

We would urge OFGEM to introduce clear and specific rules for creation of a social tariff under the energy unit price- there should be a cap created in terms of unit price to help protect disabled people to help mitigate the impairment energy penalty. Under OFGEM’s current proposals there are no safeguards to protect people whom face additional energy unit costs as they have no choice but to keep their heating on as a result of their impairments. Disabled people should be put on a social tariff with a social standing charges and proportionate unit costs. This tariff should be available to individuals on low income and/or fixed incomes (i.e older people and pensioners).