The secret £200 bill you’ll pay for failed energy firms

However, David Osman, a former senior economist at Ofgem, told Telegraph Money the charge should only be £60 per year. The substantial increase in unnecessary cost has all but wiped out any benefit of the Chancellor’s flagship “energy rebate” scheme which will see 28 million households receive £200 in October.

He also warned that using the standing charge to recover costs rather than the unit rate was unfair on the low income households. For the poorest 10pc of households, the standing charge now amounts to a third of their total energy spending.

Mr Osman added: “Ofgem’s policy of raising the standing charge instead of the price per unit of energy is perverse. Capping it [at £60] would not only protect vulnerable consumers, reduce emissions and improve energy security, but also boost competition as consumers would only need to consider unit rates to find the cheapest option.”

Ofgem said the rise was intended to cover the costs suppliers have faced bringing new customers on from failed firms. 

A spokesman said its “top priority” was to protect consumers, including making sure bill payers pay a fair price. “We are strengthening the retail market through effective stress testing of suppliers, which will reduce the cost of companies leaving the market as far as possible,” they added.

However, Ruth London of charity Fuel Poverty Action said the decision to increase charges was a “huge injustice” that must be “urgently reversed”.

She added: “The support offered by the Government – essentially a loan that customers will have to pay back, and some help for council tax payers – barely scratch the surface of what is needed.”

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