Ofgem has opened an industry consultation on introducing a tariff without a standing charge, the regulator said on 25 February 20251. The announcement came in the same statement in which Ofgem set the energy price cap for 1 April to 30 June 20251.
From 1 April to 30 June 2025 the price for energy for a typical household who use electricity and gas and pay by Direct Debit will go up by 6% to £1,849 per year1. Ofgem said this adds £9.25 a month to a typical household's energy bills, and that the level is 9% (£159) per year higher than the cap set for the same period in 2024, which was £1,6901.
Under the new cap, a household on a standard variable tariff paying by Direct Debit will pay on average 27.03 pence per kilowatt hour (kWh) for electricity, with a daily standing charge of 53.80 pence per day1. Gas will average 6.99 pence per kWh, with a daily standing charge of 32.67 pence per day1. Both figures are averages across England, Scotland and Wales and include VAT1.
| Rate, 1 April to 30 June 2025 | Electricity | Gas |
|---|---|---|
| Unit rate (pence per kWh) | 27.03 | 6.99 |
| Daily standing charge (pence per day) | 53.80 | 32.67 |
Ofgem attributed the increase mainly to rising global wholesale prices1. It said some people may see a reduction in their standing charges, but that this will depend on the region in which they live1. The regulator has not published the design of the proposed tariff without a standing charge, the rates it would carry, or a date for when it might be available; none of these has been reported1.
"We have recently opened an industry consultation on introducing a tariff without a standing charge."
Ofgem also announced an extension of the debt allowance, which supports suppliers helping customers who are having difficulty paying their bills1. The government has announced an extension to the Warm Home Discount Scheme, which suppliers apply to eligible customers' bills automatically1.
Why it matters for households
A standing charge is paid every day regardless of how much energy a home uses, so it is the part of a bill that does not fall when consumption falls1. For a home that has cut its use through insulation, solar or a heat pump, that fixed daily cost becomes a larger share of the total bill, and it is the element a household cannot reduce by changing how it uses energy.
A tariff without a standing charge would move more of the recovered cost into the unit rate, so the bill would track consumption more closely. Ofgem has not said how such a tariff would be priced, whether it would be offered by all suppliers, or whether it would sit inside or outside the price cap1. The consultation is described only as an industry consultation, and no closing date or outcome has been reported1.
What happens next
Ofgem reviews and sets the cap every three months1. The levels for 1 July to 30 September 2025 will be published by 27 May 20251. No timetable has been given for the consultation on a tariff without a standing charge1.