Ofgem has unveiled plans to force energy suppliers to offer tariffs with low or zero standing charges, giving customers more flexibility in how they pay for their energy. A consultation launched today will explore how these tariffs, set to be available from winter 2025/26, could work in practice.
Standing charges cover fixed costs like network maintenance and infrastructure upgrades. Tens of thousands of consumers have pushed for their removal, arguing it would help manage bills and debt. But Ofgem warns that while costs can shift, they can’t disappear—tariffs without standing charges will come with higher unit rates.
“We know from the huge response we’ve had that many feel standing charges are unfair,” said Charlotte Friel, Ofgem’s director for retail pricing and systems. “However, we also know that vulnerable, high-energy users… would suffer disproportionately if these costs were added to the unit rate for everyone.”
To address this, Ofgem is considering three models: a single unit rate, a falling block tariff where prices drop after a certain usage and a rising block tariff where costs increase after a set threshold. Minimum usage requirements may also be introduced to prevent unfair cost distribution.
The move comes as Ofgem works on broader reforms, including a proposed Debt Relief Support Scheme to help struggling households. The consultation runs until March 20, 2025, inviting feedback from consumer groups, charities and suppliers.
This could be a game-changer for energy bills—but the devil will be in the details.
View the full consultation here.
