Ofgem confirms plans to introduce lower standing charge tariffs

• The regulator has published a consultation on requirements for suppliers to offer a lower standing charge tariffs.
• Under the plans, these tariffs would be available to customers in every region of Great Britain (England, Scotland and Wales) by January 2026.
• This follows the launch of the regulator’s wide-reaching review of how essential costs are shared across the system.

Households will be given more choice in how they pay the fixed costs currently covered by the standing charge under plans put forward by the energy regulator, Ofgem, today (Wednesday 24 September 2025).

Standing charges cover the fixed costs of delivering energy to peoples’ homes and businesses, including the cost of essential maintenance and infrastructure upgrades.

While the regulator is clear that it cannot remove the costs that make up the standing charge from the system and can only move from one part of the bill to another, it has carefully considered how to offer more choice for how customers pay these costs.

Ofgem has today published a consultation on introducing new rules that will require suppliers to offer a lower standing charge tariff, which will make the option available to all customers in every region of Great Britain. If implemented, the tariffs will be offered by suppliers by the end of January 2026, and will be available to all consumers on different payment methods.

However, the regulator has made clear that this change is unlikely to reduce bills, as tariffs with a lower standing charge will have a higher unit rate. So, once available, customers should consider their circumstances and seek advice from their supplier or consumer groups.

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 sector has already shown us it's possible with some suppliers voluntarily offering low or no standing charge tariffs, but we need to see widespread availability across the market so this choice is available to everyone.

“The costs covered by the standing charge ultimately must be paid. They cover the costs of transporting energy to your home or business, and ensure we continue to invest in the networks, so they are future ready, and we have a stable and secure energy  system. We cannot remove these charges  , we can only move costs around. These changes would give households the choice they have asked for, but it’s important that everyone carefully considers what’s right for them as these tariffs are unlikely to reduce bills on their own.”

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. That’s why we are working with Ofgem to make sure the fixed costs in the energy system are shared fairly.
 
“This government is standing up for billpayers – from expanding the Warm Home Discount to 2.7 million more households this winter, to holding suppliers to account for delivering a fair deal to their customers, to helping millions of families heat their homes more affordably through our Warm Homes Plan, which will be published in October.”

The update to mandate suppliers to offer consumers a low standing charge tariff comes as a short-term intervention, until  the regulators  wide-ranging examination of how to allocate costs within the energy system, as the country move towards a renewables-dominated system, concludes.

Ofgem’s cost allocation and recovery review will look at the end-to-end process – from energy generation through to household use – alongside the trade-offs involved in different models of cost allocation, and consider how to design a pricing system that is fair, transparent, and is working in the best interests of all consumers.

This is alongside its plans to tackle the growing impacts of rising debt in the energy system, and create lasting change in the way debt is managed and customers in debt are supported. Under these plans, Ofgem has proposed establishing a fund called the debt relief support scheme which suppliers would use to either write off debt that is so significant it will never be paid back or help pay off debt by ‘debt matching’ customer payments. 

As part of the plans, the regulator has also set out proposals to make it easier for consumers to get help from charities and debt support agencies and ensure a consistent approach is taken across the board, to help to limit the risk of unsustainable levels of debt building up in the future once again.