Insights ¦ Domestic consumer views on energy pricing

### Key Take Aways 1. The majority of domestic consumers perceive standing charges as ‘unfair,’ driven by a lack of control and perceptions of high costs. 2. Less than a quarter of consumers regard unit rates as unfair, indicating a nuanced view of energy pricing components. 3. Consumer preferences for cost structures are highly divided, with some favouring removal or reduction of standing charges, others supporting current models. 4. Consumer understanding of the trade-offs in cost structures impacts their acceptance, with more information correlating to reduced opposition. 5. Affordability remains the paramount concern, especially for vulnerable and low-income groups, with a strong call for governmental support. 6. Consumer perceptions of fairness vary: some favour proportional, income-based approaches, while others prefer fixed, equal charges, reflecting subjective views on fairness. 7. Simplicity and transparency are key priorities, with a preference for easy-to-understand energy pricing systems that do not require active management or complex choice-making. 8. There is notable support for innovation, provided it benefits consumers and remains affordable, though trust issues regarding energy companies’ expenditure persist. 9. Findings indicate no ‘one-size-fits-all’ solution; reform proposals will need to balance complex trade-offs and diverse consumer preferences. 10. Providing additional information about standing charges can slightly lessen perceived unfairness, highlighting the value of transparency. 11. Consumer desire for fair pricing emphasises protecting those in vulnerable circumstances, often viewed as a government responsibility, with low awareness of existing support. 12. Future energy policy must address transparency, simplicity, and consumer protection through ongoing research and targeted behavioural trials. ### Key Statistics – 62% of consumers think standing charges are unfair. – 19% believe standing charges are fair. – 23% consider unit rates unfair, whereas 54% regard them as fair. – 61% of low energy users regard standing charges as unfair. – 50% of high energy users perceive standing charges as unfair. – 58% of online experiment participants believed standing charges should be reduced or removed. – 11% felt standing charges should be completely eliminated based on the granular trade-off scenario. – 28% preferred removing standing charges entirely and increasing unit rates. – 23% supported reducing standing charges with increased unit rates. – 18% did not have a clear stance or chose ‘don’t know’. – 45% identified unfairness with standing charges as a key reason for opposition. – 58% of participants feel standing charges penalise low energy households. ### Key Discussion Points – Consumer perceptions of fairness are influenced by whether charges are based on actual energy use or fixed, universal amounts. – There is no clear consensus on the optimal reallocation of energy costs, highlighting the complexity of designing reform. – Affordability for vulnerable consumers is central; many believe government support is the primary mechanism to achieve this. – Providing more detailed information about standing charges can reduce perceptions of unfairness and opposition. – Consumers generally favour structures that enhance transparency, simplicity, and control without increasing system complexity. – Trust remains a barrier to innovation; consumers seek guarantees that investments lead to tangible benefits. – Preferences for pricing models shift when consumers see real-time impacts and understand trade-offs better. – Resistance persists towards complex or opaque energy pricing systems, emphasising the need for straightforward, easily navigable options. – The trend towards favouring a proportional, income-based approach versus a flat, fixed rate underpins ongoing debates on fairness. – Future policy interventions should incorporate consumer insights into how leadership and communication can foster trust. – Protecting vulnerable and low-income households remains an essential driver in reform discussions. – Calls for continuous research, including behavioural trials, underscore the importance of evidence-led policy making to navigate complex trade-offs. ### Document Description This article presents a comprehensive synthesis of consumer research conducted by Ofgem in 2025 on domestic perspectives towards energy pricing and cost allocation. It summarises findings from multiple studies — including an omnibus survey, a deliberative project, and an online experiment — to explore consumer perceptions of standing charges, fairness, affordability, and willingness to accept trade-offs. The goal is to inform future energy policy reforms aimed at equitable, transparent, and simple energy pricing mechanisms while protecting vulnerable consumers during a significant transition towards renewable energy sources.