Ofgem published a summary of responses and next steps on zero standing charge tariffs

Ofgem published a summary of responses and its planned next steps on standing charges in July 2025, following a February 2025 consultation that asked for views on a zero standing charge option within the energy price cap¹. The regulator said it was looking at a wider range of options, including whether to require suppliers to have available at all times, in all regions, at least one lower or zero standing charge offer².

The July 2025 working paper was sent to key stakeholders and asked for views on alternatives to a zero standing charge price cap variant, with feedback requested by 7 August 2025². Ofgem said it had called for lower standing charge tariffs to be introduced voluntarily but had "not seen the pace of change needed to meet our policy goals"². It set out two policy objectives carried forward from February 2025: to offer customers choice and control over how they pay for the costs that make up the standing charge, and to allow suppliers to recover third party and efficient operating costs².

"we are now looking at whether to require suppliers to have available at all times, in all regions, at least one lower or zero standing charge offer."

Ofgem's consumer research found most customers feel standing charges are unfair and should be lower, but views were split on how costs should be restructured, with only some preferring to remove standing charges altogether². In an omnibus survey, 28% of respondents asked about preferred cost structure preferred to remove standing charges entirely³. Ofgem stated that lower or zero standing charge options are not designed to be an affordability measure, and that measures for targeted affordability support sit within the remit of Government².

The working paper set out options for how a requirement could work, including restricting it to suppliers with a significant domestic customer base, for example those with over 150,000 domestic accounts, which Ofgem said would cover over 90% of the domestic market². It also floated a consumption proxy for primary residence, such as three months' worth of average annual consumption, a low percentile of annual consumption, or allowing suppliers discretion to set their own threshold². Ofgem said the options could be mandated for prepayment meter customers at a minimum, with optionality to include other payment types, and that consumers could be required to be on a smart meter to access the tariffs². It noted that approximately 25% of prepayment customers are already on zero standing charge tariffs available in the market².

Standing charges are a daily charge that energy customers pay even if they use no energy¹. Ofgem describes them as recovering the costs of 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. 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 due to a shift in the funding of the Warm Home Discount away from standing charges and towards unit costs¹.

Why it matters for households

A standing charge is paid regardless of how much energy a home uses, so it takes up a greater share of the bill for households that use relatively little energy and a smaller share for those that use a lot¹. Under the October to December 2026 direct debit price cap, average standing charges are 54.8 pence a day for electricity and 29.7 pence a day for gas, or 84.5 pence a day for dual fuel customers¹. Standing charges will make up 18% of a total dual fuel bill for typical consumption under that cap, down from a recent peak of 24% in the third quarter of 2024¹. 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.

For a household weighing up no standing charge tariffs versus standard tariffs, the trade-off is a lower fixed daily cost against a higher unit rate, and Ofgem has said these tariffs are not designed as an affordability measure². The maximum unit rate is also set by the cap, so reducing the standing charge means fixed costs must be recovered through higher unit prices¹. Ofgem has acknowledged that the way it sets the price cap "strongly influences how retail suppliers recover fixed costs"¹. The standing charge reform work sits alongside Ofgem's wider Cost Allocation and Recovery Review, which is examining how energy system costs feed through to consumer bills².

What happens next

Ofgem said it aimed to publish a statutory consultation in autumn 2025 alongside draft standard licence conditions and an impact assessment, with a view to publishing a decision by the end of the year, and that if it decided to implement such a policy on that timeline it would expect to see new tariffs in the market from January 2026². The House of Commons Library records that in September 2025 Ofgem announced it planned to go ahead with a new requirement for suppliers to offer at least one lower standing charge tariff for all payment methods in all regions and to smart and traditional meter customers¹. It also records that a one-year pilot of lower standing charges was launched starting in April 2026, later put back to June 2026, first offered by four of the big suppliers with the number of customers who can sign up limited¹.

Sources3 cited

1. Energy standing charges - House of Commons Library, commonslibrary.parliament.uk
2. Mandating lower or zero standing charge tariffs: A technical working paper, ofgem.gov.uk
3. Requirement to offer lower standing charge tariffs, consult.ofgem.gov.uk