The energy price cap increase next week means millions of households on variable tariffs will see their bills rise.
There are some ways to alleviate some of the pain of Awful April including by opting for a fixed tariff to save some money on your bills.
Fixing means the amount you pay for your energy will be less than the price cap, which is rising to £1,849, for an average dual-fuel household, charged at 27.03p/kWh for electricity and 6.99p/kWh.
However, a hidden charge added to your bill makes up an even bigger part of your bill and the amount you’ll pay will depend entirely on where you live.
The standing charge postcode lottery means that some households pay significantly more than the average because they live in a certain area.
Postcode lottery: You’ll pay more for your energy depending on where you live
Why standing charges are a postcode lottery
Standing charges are a fixed fee set by energy suppliers and rack up daily, regardless of how much energy you use that day.
It means that even if a household used no gas electricity they would still have to pay an energy bill of about £300 a year.
Standing charges are set by the energy price cap and are set to fall from 31p to 29p for gas and 60p to 53p for electricity, but some households will pay far more.
Ofgem data shows some minor differences between unit rates depending on where you live in the country.
The average unit price for electricity is 27.03p, with some minor variations between regions. The biggest divergence comes in standing charges.
While the average standing charge for single-rate electricity is just under 53.8p per day, households in North Wales and Mersey pay the most at 69.54p per day. They’re also hit with higher unit rates of 28.5p/kWh.
Customers in Northern Scotland pay the second highest standing charges at 60.87p per day, followed by the ‘Northern’ region and Yorkshire at 59.85p and 58.64p per day, respectively.
At the lower end, Southern England pays 45.13p per day, nearly 10p below the average, followed by London which has standing charges of 46.2p per day.
For gas, standing charges are slightly lower at an average of 32.67p per day with far fewer differences between regions.
For example, the region paying the highest standing charge for gas is the Southern Western region paying 7.22p per day. Meanwhile, the East Midlands pays the least at 6.85p per day.
Standing charges cover the costs of supplying gas and electricity to your home which is why they are often more expensive in rural areas, where the cost per home to the supplier is higher.
Can you cut the price of your standing charges?
One of the biggest problems with these stark regional differences is that there’s not much you can do unless you move.
Unlike unit prices, standing charges tend to stay the same across suppliers so you can’t easily switch to a different type of tariff that offers a discount.
Some suppliers offer discounts, namely the EDF price tracker tariff which offers you a £100 annual discount on the fixed fees.
However, the way the system works means that you might end up with higher unit rates, which will not translate into lower bills if you use a lot of energy.
Elise Melville, energy expert at Uswitch, says: ‘Picking an energy deal which includes lower standing charges can be a good option for households that use less energy, because the standing charges make up a larger proportion of their bill.
‘So if you’re a single-person household or you don’t use your heating much, it may be worth looking into.
‘But households with higher energy usage should beware that the trade-off for lower standing charges is often higher unit rates. This means that running a comparison to see deals with personalised costs based on your usage is even more important.’
Tracker tariffs might be a good option if you’re not ready to fix your bill for between 12 and 24 months and help to reduce standing charges.
Melville says: ‘If you’re on a default tariff, then you will be able to make a saving on a tracker tariff. The key is to stay informed and make sure the deal aligns with your budget and lifestyle.’
Will standing charges change?
If you’re in an area that has higher standing charges, then good news might be on the horizon.
Regulator Ofgem recently published proposals that would mean suppliers have to offer tariffs with low or no standing charges.
It will look at various options including a single unit rate, which would mean households would have to pay the same unit rate for gas and electricity and a zero or low standing charge.
But these rates would likely be much higher than the current price cap-aligned tariffs.
It is also looking at falling block tariffs, where customers pay a higher unit rate until a certain amount of energy and then a lower rate after that threshold.
Similarly, it is looking at rising block tariffs, where customers will pay a lower rate until a certain point, after which they will increase.
Ofgem is also looking at zonal pricing, where prices would be set regionally depending on supply and demand.
Octopus Energy boss Greg Jackson has been a strong advocate of the reform.
He told This Is Money: ‘The UK already has a ‘postcode lottery’ in energy – Scottish households are paying over 50 per cent more on standing charges than those in London.
‘With £3.7billion of savings per year, zonal pricing can level the playing field, slashing inefficiencies and delivering fairer and lower prices across the country.
‘The current system is failing consumers. We need bold decisions to bring bills down immediately, not someday in the future.’
However, the industry is at odds as to whether zonal pricing is worthwhile.
RenewableUK, the trade association for the UK’s renewable energy sector, is one body warning against the introduction of zonal pricing.
It claims zonal pricing would jeopardise investment in clean energy and push electricity prices up in parts of England and Wales – with analysts suggesting the highest increases would be in the south of England.