Ofgem announced on 1 September 2025 that it plans to require domestic energy suppliers to offer at least one lower standing charge tariff, and launched a consultation on the proposal. The statutory consultation, published on 24 September 2025, set a response deadline of 22 October 20251. The requirement would apply to all payment methods in all regions and to customers on both smart and traditional meters1.
Under the proposal, suppliers would have to offer a tariff priced £150 below the price cap nil consumption level1. Ofgem said it is also considering going further, for example requiring tariffs representing a £200 discount from the nil consumption dual fuel cap level1. The four cost categories involved account for approximately £168 of the average standing charge within the October 2025 price cap, which was around £3201. Ofgem proposed splitting the reduction between fuels, as a reduction of £65 to £90 for electricity consumers and £85 to £100 for gas consumers1.
The consultation set out minimum consumption thresholds of 666kWh and 2,836kWh per annum for electricity and gas respectively, calculated on what an average consumer would have consumed over 90 days1. Ofgem proposed a supplier threshold, such as 50,000 domestic customers, which it said would ensure over 99.5% of current customers would be with eligible suppliers1. It also proposed a sunset clause so the requirement initially applies for a limited period, such as two years, with the option to review and extend1.
"We are proposing to amend the SLCs to require suppliers to offer a tariff with a standing charge that is priced £150 below the price cap nil consumption level"
Ofgem's own foreword states that the proposals will not result in cheaper bills for all consumers, because the essential costs of running the energy system still have to be paid, but that they can provide better choice and control in how consumers pay1. It said most respondents to earlier engagement favoured a reduction, but not removal, of standing charges, even when told this could raise their bills1. In an omnibus survey, 28% of respondents asked about preferred cost structure preferred to remove standing charges entirely1.
National Energy Action, the national fuel poverty charity, said the step was modest and that standing charges or unit charges recovered through overall energy bills will remain high and even increase2. It said the proposals will not change the differences consumers pay depending on where they live in Great Britain, nor how prepayment customers are affected if they fall into further difficulties paying2. It added that much of the complexity is being left at the feet of consumers, with a risk of further disengagement or distrust2. NEA cited consumer energy debt of £4.15 billion, three-quarters of which is arrears with no payment plan2.
Which? reported that the tariffs are expected to be in place from January 2026 onwards, and that the money will be made back in higher unit rates, so the tariffs will not suit everyone3. It gave average price-capped direct debit standing charges of 53.68p per day for electricity and 34.03p per day for gas, around £320 a year for a household using both fuels3. It said Ofgem had previously considered requiring a zero standing charge option, but this was scrapped after suppliers raised concerns it would be too complex and costly3.
Why it matters for households
Standing charges are a daily charge that energy customers pay even if they use no energy4. They recover the costs of providing and maintaining the wires, pipes and cables that deliver power to a customer's door, along with the staff and buildings required for the energy business to function4. Because they are fixed, 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 large amount4. Under the Q4 2026 cap, standing charges will make up 18% of a total dual fuel bill for typical consumption, down from a recent peak of 24% in Q3 20244. At the low consumption level for electricity, standing charges make up 32% of a final bill4.
A lower standing charge tariff shifts fixed costs into unit rates, so the total cost of the energy system is still recovered. For a home with low consumption, or one that is empty for periods, a lower daily charge can reduce the amount paid on days with little or no use. For a home with higher consumption, the higher unit rate can outweigh the saving. The proposal does not change regional differences in electricity standing charges, which arise from differences in network charges levied by distribution network operators4. Standing charges for standard credit customers are higher than for direct debit, due to higher supplier operating costs and higher debt-related costs4. Since April 2024, prepayment standing charges have been set at the same level as direct debit, funded through a levelisation charge on direct debit customers4.
What happens next
The consultation closed on 22 October 20251. Ofgem said it would consider all responses and publish the non-confidential responses alongside a decision on next steps1. Which? reported the tariffs are expected to be in place from January 2026 onwards3. National Energy Action said that under the plans the tariffs would be available to customers in Great Britain by January 20262. Ofgem's foreword states that it will bring forward the next steps of its wider cost allocation and recovery review early next year1.
Sources4 cited
- Requirement to offer lower standing charge tariffs, consult.ofgem.gov.uk
- Ofgem lower standing charges tariff consultation: ‘this complexity is being left at the feet of consumers’ - National Energy Action (NEA), nea.org.uk
- Energy standing charges: what are they and could you pay less? - Which?, which.co.uk
- Energy standing charges - House of Commons Library, commonslibrary.parliament.uk