Martin Lewis £300 'concern' over winter fuel and adds 'It was not designed to do that'

Martin Lewis has issued a £300 warning over heating bills this winter and expressed concern that energy companies could 'charge what they like'. The personal finance experts expressed concern that changes to rules proposed by regulator Ofgem could backfire and see under pressure customers actually charged more.

The changes announced yesterday by energy minister Michael Shanks are aimed at helping households switch to flexible energy tariffs and use smart appliances to help cut electricity bills. However Mr Lewis said he felt that within the plans are changes which could actually lead to the standing charges going up.

In the UK, electricity standing charges are fixed daily fees on your energy bill, regardless of how much electricity you use. They cover the costs of maintaining the energy network, meter readings, and government initiatives, ensuring a reliable energy supply to your home - but they have been criticised as not being related to how much power people use or ability to pay - so in fact proportionally the poorest pay more.

Taking to X Mr Lewis said: "I'm concerned that today @Ofgem has put out plans that could potentially weaken the 'low or no standing charge Price Cap alternative' that was due to come this winter. The proposal, which originally came from our MSE submission, was if you couldn't cut the main Price Cap Standing charges (as would be preferred) instead have two Price Caps... one as now, and one with no standing charges, but higher unit rates.

"That tariff would be better for those with LOW usage where the huge £300+/yr standing charges you pay just for the facility of having gas & electricity are a moral hazard. Yet as you'll see it's now suggesting it mightn't do it within the Price Cap... . It says "we are now also looking at whether to require suppliers to have available at all times, in all regions, at least one lower or zero standing charge offer."

Mr Lewis said he had two big concerns:

• "If it's not part of the Price Cap it likely won't be price regulated, so firms can charge what they like. In other words they could choose to offer a no/low standing charge tariff but with hideously high unit rates defeating the purpose of getting it for almost everyone.
• "One of the keys to ensuring it is within the Price Cap is it would mean that vulnerable customers who are low users could automatically defaulted to it. Outside the cap it would be a 'you must choose it' tariff."

He added: "Even though the Price Cap has sadly, since the energy crisis, become a de facto tariff for most people. That's not what it was designed to do. It was there to there to protect vulnerable users who never switched (eg those with dementia) by ensuring they weren't being ripped off.

"That's why this should be within the Price Cap mechanism so those people can both be price protected and be shifted to the right low standing charge tariff by default. My team and I will be responding strongly to the consultation on this to try and head this off, or work out how to add those protections within this scheme."

The Government wants to offer consumers new ways to take advantage of off-peak, lower electricity prices, through flexible tariffs and smart technology. This includes helping electric vehicle (EV) drivers get discounts on their electricity when using public chargers at off-peak times.

It also plans to ensure suppliers make information on smart tariffs more accessible to consumers, while taking the next steps to offer tailored products and services based on electricity usage.

The so-called Clean Flexibility Roadmap comes as part of the UK's net-zero aims, while also helping lower bills and boosting the resilience of the power network.

Britain will need to shift towards more flexible energy use as the UK becomes more dependent on wind and solar power, such as charging EV batteries when wind is generating a lot of electricity.

Mr Shanks said: "This roadmap gives households and businesses the choice and control over when and how they use their energy. The flexible electricity system we are working to build will help make that a reality for consumers across the country, by supporting them to bring down their bills through using new tariffs and technologies.

"In this way we will protect working people's pockets and ensure they are the first to benefit from our clean power mission." A flexibility commissioner will be appointed to lead the policy work, and an annual forum will be set up to track progress on the initiative.

Akshay Kaul, Ofgem's director general for infrastructure group, said: "A more flexible energy market will be a real game changer, giving households more control over what they pay for their energy.

"Small lifestyle tweaks such as programming a dishwasher or tumble dryer to run overnight when costs are low or charging your electric car during high winds can have a material impact on people's bills.

"At Ofgem we're opening up flexibility markets to bring better tariffs and products to consumers to make cheaper bills a reality."

The Government has also launched a two-month consultation looking at how more consumers can be supported to use energy flexibly.