Energy stealth tax could hit more than £500 to cover the £6.5 billion cost of collapsed energy giant Bulb as families struggle with rising bills
- Families have already been hit by gas and electricity bill increase via hidden levy
- Billpayers will see rise of £273 each but this could skyrocket under new proposal
- ‘Standing charge’ payment will help cover £6.5billion cost of Bulb’s collapse
A stealth tax on household energy bills could jump to more than £500 in plans to cover the cost of failed energy giant Bulb.
Families have already been hit by an increase to gas and electricity bills through the hidden levy that costs billpayers around £273 each.
But this could skyrocket under proposals being considered by ministers to pay for the eyewatering £6.5billion cost of Bulb’s collapse.
A stealth tax on household energy bills could jump to more than £500 in plans to cover the cost of failed energy giant Bulb
Many are unaware of the ‘standing charge’ payments – which are quietly added to every bill.
The charge covers the daily cost of connecting customers to their gas and electricity supplies, and the upkeep of networks.
The Mail on Sunday revealed last week the charge has risen by almost 50 per cent in a year to pay the cost of around 30 energy firms going bust.
That has added more than £2 billion to standing charges, an average increase of £87 since the end of 2021.
A further £230 could be added to pay for Bulb’s collapse. The cost could come down if a drop in energy prices is sustained through the winter.
Industry sources said the final bill for Bulb, which had 1.7m customers when it collapsed in November 2021, will come to light in spring.
They added that a recent fall in the cost of wholesale gas could reduce the bill by billions if prices remined low.
The standing charge levy is set at a fixed rate with no consideration of how much gas and electricity customers actually use.
Campaigners have expressed fury, saying the move would pile more pressure on people struggling with a cost of living crisis.
Matt Copeland, head of policy and public affairs at National Energy Action said: ‘We are concerned that if the costs of the failure of Bulb are passed through in the same way as for other suppliers, the increase in the standing charge would be significant, causing acute detriment to low income households in the middle of an energy crisis.
Many are unaware of the ‘standing charge’ payments – which are quietly added to every bill
‘BEIS and Ofgem must work together to ensure that the costs of Bulb, which have been significant and exceptional, must not be passed on to energy customers through increased standing charges in a way that causes detriment to those most impacted by the crisis.’
Cash-strapped pensioners could be impacted the most by the increase as they pay the same standing charge as millionaires living in large, well-heated homes.
The charge is a stand-alone levy and should not have been affected by the vast rise in wholesale energy prices worldwide exacerbated by Russia’s invasion of Ukraine.
Energy regulator Ofgem approved the use of the levy to cover the cost of its bungled regulation of the market, which led to around 30 firms going bankrupt in less than two years.
Dame Clare Moriarty, chief executive of Citizens Advice, has sought assurances from Business Secretary Grant Shapps that Bulb’s controversial rescue will not burden billpayers.
She warned: ‘This is, in reality, a levy on customer bills.’
Like other suppliers that failed during the energy crisis, Bulb collapsed because it was financially unprepared for a sudden spike in energy prices.
BEIS declined to comment on when a decision would be made.
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