Ofgem published an options paper on ways to reduce standing charges in August 2024, according to a House of Commons Library briefing on energy standing charges1. The paper followed a call for input on standing charges that the regulator launched in November 20231. Consumer Scotland, the statutory advocacy body for consumers in Scotland, described the August 2024 document as Ofgem's latest discussion paper on the issue2.
Standing charges are a daily charge that energy customers have to pay even if they use no energy1. Ofgem describes them as recovering the costs required to provide energy company services, including providing and maintaining the wires, pipes and cables that deliver power to a customer's door, through to the staff and buildings required for the energy business to function1.
"In August 2024, Ofgem published an options paper on ways to reduce standing charges."
The briefing records the sequence that followed. In February 2025 Ofgem launched a further consultation asking for views on a zero standing charge option within the energy price cap, and in July 2025 it published a summary of responses and its planned next steps1. In September 2025 Ofgem announced it planned to go ahead with a new requirement for suppliers to offer customers at least one lower standing charge tariff for all payment methods in all regions and to smart and traditional meter customers1. A one-year pilot of lower standing charges was then set to start in April 2026, later put back to June 2026, first offered by four of the big suppliers with a limited number of customers able to sign up1.
The briefing gives the average standing charges under the October to December 2026 direct debit price cap as 54.8 pence a day for electricity, 29.7 pence a day for gas and 84.5 pence a day for dual fuel customers1. The electricity figure falls by 2.4 pence per day in October 2026 because of the government's decision to remove VAT from electricity bills for six months from October 2026, while the gas standing charge rises by 0.7 pence per day, largely due to an increase in the allowance for supplier operating costs1.
| Measure | Figure |
|---|---|
| Electricity standing charge, Q4 2026 direct debit cap | 54.8p a day |
| Gas standing charge, Q4 2026 direct debit cap | 29.7p a day |
| Dual fuel total | 84.5p a day |
| Share of a typical dual fuel bill | 18%, down from a peak of 24% in Q3 2024 |
Source: House of Commons Library, citing Ofgem price cap data1
Standing charges are a fixed cost, so they take up a greater share of a household's bill if it uses relatively little energy and a smaller share if it uses a relatively large amount1. At the low consumption level for electricity, standing charges make up 32% of a final bill, meaning one quarter of consumers face standing charges of at least that share of their annual electricity bills1. Electricity standing charges jumped by more than 80% in April 2022, largely due to supplier of last resort costs after many smaller suppliers went out of business1. Policy cost elements of standing charges were reduced from April 2026 because funding of the Warm Home Discount shifted away from standing charges and towards unit costs1.
Consumer Scotland reported that big rises in energy prices in 2022 and 2023 drove large increases in energy poverty, affecting around one third of Scottish households, and that 26% of households in Scotland in 2024 reported finding it difficult to keep up with their energy bills2. It also found that around 9% of Scottish households were in energy debt in winter 20242.
Why it matters for households
A standing charge is paid whether or not a home uses any energy, so it is the part of a bill that cannot be reduced by using less. For a household that uses little gas or electricity, the fixed daily amount is a larger share of what it pays, which is why the options paper and the later zero standing charge consultation matter most to low users. Reducing the standing charge does not remove the underlying costs: the briefing notes that fixed costs would have to be recovered through higher unit prices, and the maximum unit rate is also set by the price cap1. Suppliers are not obliged to charge the maximum daily amount under the cap, or any standing charge at all, and alternative tariffs outside the cap exist with no standing charge but a higher unit price1. Ofgem has acknowledged that the way it sets the price cap strongly influences how retail suppliers recover fixed costs1. Standing charges also vary by payment method and by region: there are separate caps for gas and electricity, for direct debit, standard credit and prepayment customers, and in each of the 14 energy supply regions, with substantial regional variation in electricity standing charges due to differences in network charges1.
What happens next
The briefing states that in July 2026 Ofgem will bring in new lower typical domestic consumption values for its presentation of bills under the price cap1. The lower standing charge pilot, first offered by four of the big suppliers, was scheduled to begin in June 2026 after being put back from April 20261.
Sources2 cited
- Energy standing charges - House of Commons Library, commonslibrary.parliament.uk
- Consumer Outlook 2024/2025 (HTML) | Consumer Scotland, consumer.scot