Ofgem announced on 25 February 2026 that a pilot for lower standing charge tariffs will start this spring, to bring greater choice for consumers, particularly those with low energy usage. The regulator said it will first be offered to eligible customers of EDF, E.ON, Octopus and British Gas1. The same announcement confirmed a 7% (or £117) reduction in the energy price cap for the period covering 1 April to 30 June 20261.
The pilot sits alongside a separate change to how the Warm Home Discount is recovered. Ofgem confirmed a decision to move Warm Home Discount costs from standing charges to the unit rate, following a government decision. As a result, standing charges will drop by an average of £13, or 4p a day, for customers using both electricity and gas1. The Welsh Government's written statement of 26 February 2026 also welcomed confirmation that a pilot for lower standing charge tariffs will start this spring, describing standing charges as a concern for many households across Wales2.
The cap itself will be set at £1,641 for 1 April to 30 June 2026, a reduction of 7%, or £117, from the current level of £1,7582. For an average household paying by Direct Debit for gas and electricity, the overall bill will be £1,641 per year, a reduction of around £10 a month1. Ofgem said recent government budget interventions relating to policy costs are the main cause of the reduction, and that the level is more than £200 lower than a year ago1. The Welsh Government statement attributed the reduction primarily to the change to policy costs announced in the autumn Budget, including the closure of the Energy Company Obligation and the Great British Insulation Scheme and the movement of other policy costs into general taxation, which together reduce average household bills by around £1502.
Ofgem said network costs have increased by £66 (£6 a month), primarily due to price control changes associated with RIIO3 and investment needed to upgrade energy infrastructure1. It also said wholesale prices have fallen by 6% over the past three months but continue to make up the largest portion of the bill1.
"Ofgem has also confirmed that a pilot for lower standing charge tariffs will be starting from this spring to bring greater choice for consumers, particularly those with low energy usage."
Why it matters for households
Standing charges are the fixed daily amount billed regardless of how much energy a home uses, so they fall hardest on low-usage households. A tariff with a lower standing charge shifts more of the cost onto the unit rate, which changes the arithmetic for homes that use little gas or electricity, and for those weighing up standing charge reform and zero standing charge tariffs. The separate Warm Home Discount change lowers standing charges by an average of £13 for dual-fuel customers but moves that cost into the unit rate, so the effect on a given bill depends on usage1.
The cap reduction applies to all customers, but Ofgem said the reduction will differ for each household depending on usage, with higher energy users, particularly high electricity users, seeing a greater reduction due to a 75% reduction in Renewables Obligation costs that only affects electricity bills1. Ofgem reported that 38% of customers are on fixed tariffs, and that last year customers on a fixed tariff paid around £115 less on average than those on variable tariffs2. It also said 8 million customer accounts pay by standard credit but could be making savings of around £131 by switching payment method1.
What happens next
The new cap level applies from 1 April to 30 June 20261. The lower standing charge pilot starts this spring, first offered to eligible customers of EDF, E.ON, Octopus and British Gas1. The Welsh Cabinet Secretary for Social Justice, Trefnydd and Chief Whip, Jane Hutt MS, said she will raise supplier support with energy suppliers when she meets them on 12 March2. Eligibility criteria for the pilot, the size of the standing charge reduction, and the number of households expected to be offered it have not been reported.