Consumer Scotland published its response to Ofgem's consultation on a zero standing charge (ZSC) price cap variant on 20 March 2025. The body, which describes itself as "the statutory body for consumers in Scotland", established by the Consumer Scotland Act 2020 and accountable to the Scottish Parliament, said it did not answer each consultation question but gave broader feedback on the proposal1.
The response states that Ofgem's own modelling suggests the ZSC variant "is likely to only benefit a limited group of low-usage consumers at best", and that the design is intended to give consumers greater control over how they pay rather than to deliver savings for particular groups1. Consumer Scotland also notes that Ofgem "cannot cross-subsidise between the existing price cap variant and the proposed ZSC variant", and that any shortfall in recovering fixed costs from ZSC consumers "must" be recycled into future ZSC unit prices1.
Its central concern is seasonal cost concentration. Under the current price cap, fixed costs are recovered evenly through the daily standing charge, which smooths prices across the year. Consumer Scotland cites Ofgem's price cap formulation showing that 75.2 to 76.2 per cent of annual gas demand occurs between October and March, and that for a typical consumer with electric heating, 57.7 per cent of annual demand falls in winter1. Moving fixed costs into the unit rate would remove that smoothing and concentrate them in the colder months, which the response says is particularly concerning for prepayment meter consumers and those with high essential energy needs1.
On default tariff protection, the response gives the share of domestic customer accounts on default tariffs and not paying by prepayment meter as 71.5 per cent for electricity and 71.9 per cent for gas, as of October 20241. It warns that consumers choosing a ZSC fixed-term tariff would, when the contract expires, be moved automatically to a default tariff matching their original variant choice, and that proposed lock-in mechanisms "may limit consumer flexibility, compounding the risks for those unable to make informed switching decisions"1.
"Ofgem should further test and pilot any proposed ZSC price cap variant with a limited group of consumers representing a broad range of consumer archetypes"
The response also recommends that any trial or phasing be accompanied by a distributional analysis of its effects, and that Ofgem explore wider affordability measures with the UK Government, including a market-wide debt relief scheme and extending the Warm Home Discount for winter 2025-20261.
| Measure | Figure cited |
|---|---|
| Annual gas demand in October to March | 75.2 to 76.2 per cent |
| Annual demand in winter, typical electric heating consumer | 57.7 per cent |
| Domestic electricity accounts on default tariffs, not PPM, October 2024 | 71.5 per cent |
| Domestic gas accounts on default tariffs, not PPM, October 2024 | 71.9 per cent |
Why it matters for households
A standing charge is a fixed daily amount paid whatever the level of use, and it is the part of the bill that standing charge reform would move into the unit rate. For a household, the practical effect of a no standing charge tariff is that a low-usage home pays less across the year, while a high-usage home pays more, and the cost of the network is recovered through each unit used. Consumer Scotland's point is that this shifts the weight of fixed costs towards winter, when gas and electric heating use is highest, so the months in which a household already spends most on energy are the months in which the fixed costs land. That matters for energy independence in the household sense: a home's ability to predict and control its annual bill, rather than its exposure to a single winter period. The response also notes that the default tariff cap currently covers around seven in ten domestic accounts, so any change to how the cap variant works reaches most households, whether or not they actively choose it. Consumer Scotland's role and that of other energy consumer bodies is to represent consumers in these consultations; the decisions rest with Ofgem. For households in Scotland specifically, the response sits alongside existing help with energy bills and debt in Scotland and the tariff rules that apply in Scotland.
What happens next
The response is dated 20 March 2025 and was published the same day1. It recommends piloting with a limited group of consumers, a distributional analysis of any trial or phasing, and discussion with the UK Government on affordability support, including a market-wide debt relief scheme and an extension of the Warm Home Discount for winter 2025-20261. No decision by Ofgem on the ZSC variant, and no timetable for one, is set out in the response.