Ofgem to make suppliers offer lower standing charge tariffs by 2026
Ofgem has confirmed plans to require energy suppliers to offer at least one tariff with a lower standing charge by January 2026.
The regulator said the move follows demand from consumers for changes to how fixed costs are paid on energy bills.
Standing charges cover the cost of delivering energy to homes and businesses, including essential maintenance and infrastructure.
Ofgem data shows households in North Wales and Merseyside face the highest electricity costs in Britain, with a daily standing charge of 67.65p and a unit rate of 27.20p per kWh – both the highest of any region.
While lower daily charge tariffs would give households more choice, Ofgem has warned that bills are unlikely to fall, as unit rates will be higher.
Tim Jarvis, Director General, Markets, at Ofgem said: “We’ve listened to thousands of consumers that wanted to see changes to the standing charge and taken action. We have carefully considered how we can offer more choice on how they pay these fixed costs, however we have taken care to ensure we don’t make some customers worse off.
“After examining all the options available to us, we believe that the right way forward is to require all major suppliers to offer at least one tariff with a lower standing charge. This will deliver the choice we know customers want, without having a detrimental impact on customers that have high energy needs, like those who rely on energy for medical reasons.”
The UK Government’s Minister for Energy Consumers, Martin McCluskey, said: “Consumers should have freedom and choice when choosing an energy tariff that works for them.
“This proposal will make more tariffs available on the market, giving people more options to pay lower standing charges if that suits their needs. It is an important step towards building an energy market that puts families first and we will continue to look at how we can go further.”
Consumer groups welcomed the extra choice but urged households to check carefully whether the tariffs would work for them.
Emily Seymour, Energy Editor at Which?, said: “While these proposals will give consumers more choice and control over their energy bills, whether a low standing charge tariff will benefit you depends on your energy usage, as these tariffs will also come with higher unit costs.”
Richard Neudegg, director of regulation at Uswitch.com, said: “More options for customers is a good thing. Energy deals with lower standing charges may be worth considering for households that use less energy, although are still unlikely to be the best choice in most circumstances.”
Ofgem said the change will act as a short-term measure while its wider review of how costs are allocated across the energy system continues.
That review will look at how costs are shared from energy generation through to household use, with the aim of designing a pricing system that is fair and transparent.
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