Dr Craig Lowery, of analyst Cornwall Insight, said the cost of net zero had been slowly shifted away from unit rates onto standing charges.
Ofgem has not denied this. The regulator admitted the charge goes towards powering networks, and the infrastructure upgrades needed to hit net zero but that standing charges would be “a matter for the next government”.
A consultation into the daily rates has been in the works since November, with the findings due to be published by the end of summer.
‘Older homes face a new net zero tax’
Britain’s energy transmission provider, National Grid Electricity System Operator, (NGESO), has set out plans for a £58bn expansion to the UK’s high-voltage transmission network, which would include thousands of new electricity pylons, substations, and other infrastructure spread across the countryside.
Future Energy Associates, which conducted a report into standing charges last year, said one way a government could hit its target whilst reducing standing charges could be by shifting the burden onto unit rates.
The report suggested that energy suppliers’ operating costs should be paid for by usage, rather than a flat daily charge, “thereby delivering an incentive to the energy market to drive down excess costs such as marketing”.
But put simply, this means that should standing charges go down, unit rates would have to rise. The likely result would be that households using more energy than others would see their monthly payments rise even further, while those who use less would see their bills drop.
Dr Lowrey, of Cornwall Insight, warned: “This would potentially have detrimental impacts on high electricity-using households, those with energy inefficient properties, and those which use electricity for heating, and those in fuel poverty. As such, broader consequences will have to be considered.”
Future Energy Associates said the next government could raise the revenue through general taxation as an alternative.
Labour has been reluctant to commit to tax rises. If the party were to move all or some of the standing charge cost to general taxation, bills would fall immediately, but households would still shoulder the cost through other taxes.