Utilita cancels tariff without daily payment: how will this affect customers.

Removal of the tariff without standing charges

According to The Sun: Thousands of energy consumers were shocked when the supplier announced the cancellation of the tariff without standing charges.

From October 1, Utilita customers with non-prepayment meters will switch to new tariffs that will include daily standing charges, which may lead to significant costs for them.

New tariffs

In a letter to customers, Utilita confirmed that those who are on the Smart Energy tariff will be moved to the Smart Energy tariff with standing charges.

The new tariffs introduce a daily standing charge of 54 pence for electricity and 34 pence for gas, as well as adjusting unit rates for energy use.

Standing charges are fixed daily contributions added to bills that cover network maintenance costs and other operational expenses.

Previously, tariffs without standing charges allowed customers to only pay for the energy they used, making them particularly attractive for those who consumed little.

Under the old tariffs, electricity cost 52.16 pence per kWh for the first 2 kWh, then decreasing to 26.3 pence.

The new tariffs lower unit rates but introduce standing charges, which may negatively impact those who use minimal energy.

These changes have caused frustration among customers who relied on the tariff without standing charges to keep their bills affordable.

One Utilita customer said on the MoneySavingExpert.com forum: 'Just received an email from them saying they switched me to a tariff with standing charge. Has anyone else received this? I've been with them for over two years.'

Another added: 'Yes, they sent this to everyone. Your options are to stay with them under the new terms or switch.'

A third commented: 'They are offering a prepayment meter without a standing charge, but I have heard mixed reviews about this option.'

Options for customers

Utilita noted that customers unhappy with the new tariffs can switch suppliers without exit fees.

Those who want to stay with Utilita can choose a prepayment meter, which still offers tariffs without standing charges.

A company spokesperson said: “Customers on prepayment, who make up 90 percent of our customer base, continue to benefit from our tariff without standing charge and the principle of ‘no use – no cost’, saving them millions of pounds annually.”

The key difference between a prepayment meter and paying by direct debit is how you pay for energy.

With a prepayment meter, you pay for energy usage in advance by topping up your meter, which can help you manage costs.

However, prepayment users are more vulnerable to disconnection, as failure to top up leads to an immediate loss of access to energy.

Paying by direct debit means receiving regular bills based on your energy consumption and making monthly or quarterly payments, which provides greater stability and avoids the risk of sudden disconnection in case of missed payment.

What are standing charges?

Standing charges are a fixed daily cost added to energy bills that cover costs such as maintaining the electrical grid and administrative expenses.

While they are unavoidable on many tariffs, they can be particularly burdensome for households with low energy consumption or for those using prepayment meters.

The energy regulator Ofgem defended standing charges, stating that they help low-income households in poorly insulated homes and those dependent on medical equipment.

However, critics, including consumer activist Martin Lewis, have called them a 'moral hazard' that burdens those who use very little energy.

He noted: 'Standing charges reduce the motivation for low-energy households to cut their bills and force many older people, who only use gas for heating in winter, to pay for it daily in summer.'

Customer outlook

Ofgem announced that companies must offer tariffs without standing charges to customers before winter and plans to conduct consultations on how these tariffs will work.

Consumers with low energy consumption, those using prepayment meters, and owners of second homes who use little heating or electricity stand to benefit from the new tariffs.

However, the energy regulator plans to maintain the option of having standing charges, which are beneficial for low-income families in poorly insulated homes or those dependent on medical equipment.

Charlotte Fril from Ofgem said: 'We are closely monitoring how these tariffs work in practice, but everyone will need to carefully consider which option best suits their needs.'

“The costs included in the standing charge ultimately have to be paid. But while they may not save everyone money, they will give people choice and greater control over their bills.'

Ofgem first announced changes to energy rules last December, but today confirmed that companies will need to offer tariffs to their customers in time for the winter period.

Help with energy bills

There are several ways to get support in paying your energy bills if you are facing difficulties.

• If you find yourself in debt, you can always contact your supplier to see if they can offer a repayment plan before switching to a prepayment meter.
• This involves repaying debt in installments over a specified period.
• If your supplier has offered you a repayment plan that you are not satisfied with, reach out again to try and find a better solution.
• Several energy companies have programs for customers who are facing difficulties in paying their bills.
• However, eligibility criteria may vary depending on the supplier, and the amount you can receive may also differ.
• For example, customers of British Gas or Scottish Gas who have difficulties paying their bills may receive grants of up to £2000.
• British Gas also offers assistance through its non-domestic gas fund and the individual family fund.
• You do not have to be a British Gas customer to apply for the second fund.
• EDF, E.ON, Octopus Energy, and Scottish Power also offer grants for customers facing difficulties.
• Thousands of vulnerable households are missing out on additional support and protection by not signing up for the Priority Services Register (PSR).
• This service helps ensure support for vulnerable households, such as older people or those with illnesses.
• Some benefits include advance notice of disconnection, free gas safety checks, and additional support in times of difficulty.
• Contact your energy supplier to see if you can apply.