Elexon administers new discount scheme for PPM standing charges
This month (October 2023) Elexon has begun to administer a new support scheme to benefit electricity prepayment meter (PPM) customers this winter by discounting their daily standing charges. Xoserve (a gas industry code manager) will be administering the equivalent scheme for gas PPMs.
£40 saving for prepayment meter customers this winter
The Government estimates that a typical PPM customer will save around £40 per year from this measure. The scheme will operate under the guise of the Energy Price Guarantee, as a way to subsidise the reduction.
Elexon supports those most in need
Elexon’s 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.”
Standing charges recover fixed costs
Energy Suppliers use standing charges to recover fixed costs for supplying customers, in a similar way to how line rental is used in telecomms. Fixed costs that Suppliers face for PPMs tend to be higher than for credit or direct debit payment plans, as Suppliers have to pay shops to offer top up services.
How the scheme works
From this month, Suppliers have been discounting standing charges for PPM tariffs by around five pence per day, per fuel, on average across all Suppliers. We will be making two payments to Suppliers to reimburse them for the cost of subsidising the reduction. The payments will be made in January 2024 (reflecting costs for quarter 4 2023 and in March 2024 for costs during quarter 1 of 2024).
Enduring Ofgem reforms to ‘levilise standing charges’
The standing charge discount scheme will be in effect until 31 March 2024. Longer term, Ofgem is looking to put an enduring reform in place to levelise standing charges for PPM and direct debit. It is consulting on ways to achieve this by April 2024 to coincide with the end of the Energy Price Guarantee.