Ofgem published an options paper on domestic standing charges on 23 August 2024, alongside its quarterly price cap announcement. The paper sets out ways to reduce the daily fixed charge paid by households, and the regulator is asking energy suppliers to offer tariffs with no or low standing charges alongside their current tariffs. Feedback on the paper closes on 20 September 2024.
The options in the paper could reduce the standing charge by between £20 and £100 per year by transferring parts of fixed supplier costs to the unit rate, the price paid for every unit of energy used. Standing charges are set by the supplier and are also included in the energy price cap. The charge is applied every day even if no energy is used, and covers the cost of maintaining the energy supply network, taking meter readings, and supporting government social and environmental schemes such as the Warm Home Discount.
Ofgem said the changes could affect people who cannot safely reduce the amount of energy they use, including those dependent on life-saving medical equipment or living in housing with poor insulation. The paper also sets out long-term considerations on the assignment of network costs, as part of a broader review of how electricity and gas system costs are recovered from users. The review began last year; Ofgem's call for input drew feedback from more than 30,000 customers, consumer groups and charities.
"Today we have published an options paper on our ways to reduce standing charges for households, called 'domestic standing charges'."
The same announcement confirmed the price cap for 1 October to 31 December 2024. For a typical household using electricity and gas and paying by Direct Debit, the price for energy will go up to £1717 per year, an increase of 10% that adds around £12 per month to an average bill. The new cap is 6% (£117) cheaper than the same period last year (£1,834).
| Rate, Direct Debit, 1 October to 31 December 2024 | Unit rate | Daily standing charge |
|---|---|---|
| Electricity | 24.50p per kWh | 60.99p per day |
| Gas | 6.24 per kWh | 31.66p per day |
Both figures are averages across England, Scotland and Wales and include VAT. The cap covers standard credit, Direct Debit, prepayment meters and Economy 7 meters. Actual bills depend on how much energy a household uses, where it lives and the type of meter it has. Ofgem has not reported regional figures in this announcement beyond pointing to its separate regional tables.
Ofgem also extended its initial 12-month allowance to cover increased debt costs associated with additional support credit, which it expects to be in place for at least another six months. Additional support credit is often issued to people at risk of being cut off because they cannot afford to top up their meter.
Why it matters for households
Standing charges are the part of a bill a household pays regardless of how much energy it uses, so they fall hardest on low-usage homes and are unaffected by cutting consumption. Moving fixed costs into the unit rate shifts the balance: a home that uses less energy would pay less overall, while a home that cannot reduce usage, for medical or building reasons, could pay more. Ofgem has acknowledged that risk directly. The proposal for no or low standing charge tariffs would give households a choice between the two structures, which matters for standing charges on energy bills and for how far a household can control its own costs through energy independence. The rules on what suppliers must offer sit within tariff rules and consumer protections, and the wider review is covered under standing charge reform.
What happens next
Feedback on the standing charges options paper closes on 20 September 2024. Ofgem will publish the price cap levels for 1 January to 31 March 2025 by 25 November 2024.