Energy providers might have to offer at least one lower or zero standing charge tariff by the end of January 2025.
Current System
The energy price cap is a cap on how much energy suppliers can pay you for each unit of energy you use if you’re on a standard variable tariff in England Scotland or Wales. This is recalculated every three months by Ofgem. Your energy bill is made up of a fixed standing charge (a daily fee you pay for being connected to the gas grid or electricity network, regardless of how much energy you use) and a variable energy charge (where you pay for each unit of gas or electricity you use, charged at a certain unit rate). You can find an overview of understanding your energy bill and its key terms here.
The energy price cap is currently set at £1,755 per year for a typical household using gas and electricity and paying via direct debit. This is a recent increase (commencing 1st October 2025) of 2% compared to the previous price cap, and will remain in place until 31st December 2025.
There are currently some energy providers who offer no or low standing charges but options are limited.
In February 2025, Ofgem initially considered introducing a new zero standing charge variant within the energy price cap However, they are now proposing a different approach…
Ofgem’s Proposal
Ofgem recently published a consultation which includes a new requirement for energy suppliers to offer at least one lower or zero standing charge tariff to their customers. If implemented, these tariffs will be offered by suppliers by the end of January 2026 and will be made available to all consumers on different payment methods.
They noted that they have heard “strong sentiment from consumers for more choice, and that they find that the high upfront nature of fixed costs can be a barrier to managing energy costs.” However, they have also stated that they “cannot make these costs go away and suppliers should be able to recover efficient costs.”
Ofgem has been clear that this change to standing charges is unlikely to reduce bills, as tariffs with a lower standing charge will have a higher unit rate. Therefore, these new tariffs may benefit those who use small amounts of energy, and those who are on prepayment meters who may currently pay a large proportion of their bill in standing charges.
They are proposing to set the minimum usage level at 666kWh for electricity and 2,836kWh for gas in order to qualify for this option.
Martin Lewis’ Response
Martin Lewis has argued that these measures do not go far enough, proposing a dual price cap where one remains as it is, with another option for a low or no standing charge, with vulnerable users defaulted to whichever is best for them.
He argues that there are two possible issues with Ofgem’s current plans:
- The new proposals do not appear to be under the price cap mechanism meaning that firms could scrap the standing charge but push up the unit rates
- Vulnerable low energy users tend to not switch tariffs so even if these options are made available, they might not access them unless it is set as a default option