The energy regulator launched a consultation back in February on proposals to introduce a low or zero standing charge option within the energy price cap
Households will be offered lower standing charge tariffs as part of a major energy bill shake-up confirmed today by Ofgem.
However, the energy regulator has warned this change is unlikely to reduce bills, as tariffs with a lower standing charge will have a higher unit rate.
Ofgem launched a consultation back in February on proposals to introduce a low or zero standing charge option within the energy price cap.
Standing charges are fixed daily fees that you have to pay to be connected to the gas and electricity networks. You have to pay these charges regardless of how much energy you use.
The standing charge for gas is currently 29.82p a day but it rising to 34.03p from October, while the standing charge for electricity is 51.37p a day, rising to 53.68p.
In an update today, Ofgem said it cannot remove the costs that make up the standing charge entirely but wants to introduce new rules that will require energy suppliers to offer a lower standing charge tariff.
If implemented, the tariffs will be offered by all suppliers by the end of January 2026, and will be available through all different payment methods, such as direct debit or prepayment.
Tim Jarvis, Director General, Markets, at Ofgem said: “We have carefully considered how we can offer more choice on how they pay these fixed costs, however we have taken care to ensure we don’t make some customers worse off.
“After examining all the options available to us, we believe that the right way forward is to require all major suppliers to offer at least one tariff with a lower standing charge.
“This will deliver the choice we know customers want, without having a detrimental impact on customers that have high energy needs, like those who rely on energy for medical reasons.
“The sector has already shown us it’s possible with some suppliers voluntarily offering low or no standing charge tariffs, but we need to see widespread availability across the market so this choice is available to everyone.
“The costs covered by the standing charge ultimately must be paid. They cover the costs of transporting energy to your home or business, and ensure we continue to invest in the networks, so they are future ready, and we have a stable and secure energy system.”
Minister for Energy Consumers Martin McCluskey said: “Consumers should have freedom and choice when choosing an energy tariff that works for them.
“This proposal will make more tariffs available on the market, giving people more options to pay lower standing charges if that suits their needs.
“It is an important step towards building an energy market that puts families first and we will continue to look at how we can go further. That’s why we are working with Ofgem to make sure the fixed costs in the energy system are shared fairly.”