Ofgem proposes universal low standing-charge tariffs to curb fixed-fee bills

Ofgem unveiled plans to require every energy supplier in England, Scotland and Wales to offer at least one low standing-charge tariff by the end of January, aiming to give households more control over fixed daily fees that many users say they cannot influence. The proposal would see such tariffs available to all billpayers, with the default expectation that they would pay higher per-kilowatt-hour rates to offset lower daily charges. The plan is subject to consultation and would not automatically reduce bills for most customers.

Standing charges cover the costs of connecting customers to gas and electricity networks, ensuring the security of supply, funding investment in the energy grid and some bill support schemes. With energy bills seen by many on price-cap tariffs rising in October, the fixed daily fees are also expected to increase. Typically, the charges amount to about 53.68 pence a day for electricity and 34.03 pence a day for gas for those paying by direct debit, though rates vary by region. In North Wales and Merseyside, electricity standing charges can be nearly 70 pence a day. Over the past year, Ofgem has faced mounting concerns from billpayers and has signaled it wants to widen consumer choice in how fixed costs appear on bills.

Under the plan, all suppliers would be required to offer a low standing-charge tariff to customers, making it a universal option rather than something some providers already offer. Billpayers would have until the end of January to switch to such a tariff, and the new options would be available regardless of how the bill is paid—whether direct debit or quarterly on demand. The costs covered by the standing charge would still be paid somewhere on the bill; Ofgem said it could only move costs around rather than remove them entirely. Tim Jarvis of Ofgem said the changes would give households the choice they have asked for, but cautioned that the tariffs are unlikely to reduce overall bills on their own. He added that those who reduce their energy use should see a larger drop in bills with these changes than they would otherwise.

The plan also allows suppliers to offer zero standing-charge tariffs, though those would likely come with higher per-unit rates.

Reaction to the proposal has been mixed. Charities say that shifting charges around the bill does not address the underlying issue of rising bills. Gillian Cooper, director of energy at Citizens Advice, said: “Plans to offer a lower standing charge may provide more choice to consumers, but won’t bring down people’s bills. With October’s price hike just around the corner, lower standing-charge tariffs will not help the millions of households bracing themselves for yet another winter of unaffordable energy bills.” Campaigners worry that more tariffs could create confusion. Dhara Vyas of Energy UK, which represents suppliers, cautioned that it is hard to see how the move would warrant the potential cost and disruption, noting Ofgem’s acknowledgment that the change would be temporary and merely move costs around on the bill.

The plans are now set to proceed to consultation before a final decision is issued. In the meantime, rising costs remain a pressure point for households, as energy bills on standard price-cap tariffs continue to trend upward in the near term. The outcome of the consultation will determine whether the universal low standing-charge option becomes a standard feature of energy pricing across Britain.