Zero Standing Charge Tariffs: What you need to know

Introduction

Every energy bill in Great Britain is split into two parts. The first part is the unit rate, which is the price you pay for the actual gas and electricity you use. The second part is the standing charge. This is a fixed daily fee that you have to pay just to be connected to the energy network. You pay this fee every single day, even if you are away on holiday and use no energy at all.

For years, consumer groups have argued that high standing charges are unfair because they penalise people who try to cut their energy use. In response, the energy regulator Ofgem has looked at ways to reduce or remove these daily fees. However, the costs of running the energy network still have to be paid. If a supplier removes the daily fee, they have to raise the unit rate to cover their costs.

This guide explains how standing charges work, details the new 2026 trial tariffs from major suppliers, and helps you work out if switching to a low or zero standing charge option makes sense for your household.

What is a standing charge and how much does it cost?

The standing charge covers the fixed costs of bringing energy to your home. It pays for maintaining the national grid, keeping gas pipes and electricity wires safe, reading meters, and running government schemes. It also includes a safety net fund that covers the cost of moving customers to a new firm if their energy supplier goes out of business.

Under the current Ofgem price cap, which runs from 1 July to 30 September 2026, a typical household paying by Direct Debit pays 57.19p a day for electricity and 29.04p a day for gas. Over a full year, this adds up to about £315 before you even turn on a light switch or the heating.

On 1 April 2026, suppliers began recovering Warm Home Discount costs through unit rates rather than standing charges. The scheme’s costs were estimated at about £39 on a typical dual-fuel bill, but other price-cap changes also affect the final standing-charge level.

The July 2026 price cap update saw overall energy bills rise by 13%, driven mostly by higher wholesale gas costs. The typical dual-fuel household bill is now around £1,663 a year, making the unit rate you pay more important than ever.

How do zero standing charge tariffs work?

A zero standing charge tariff removes the fixed daily fee entirely. You only pay for the exact amount of gas and electricity you use. If you use no energy on a Tuesday, your bill for that day is exactly zero.

However, the energy supplier still has to pay the network companies for your connection to the grid. To get this money back, the supplier will charge you a much higher price for every kilowatt-hour of energy you use. This creates a seesaw effect. As the daily fee goes down, the unit rate goes up.

Because of this trade-off, a zero standing charge tariff is not a magic way to cut your bills. It simply changes how you are billed. If you use a lot of energy, the higher unit rates will quickly cost you more than the £315 you saved by avoiding the standing charge.

The July 2026 Ofgem trials

Ofgem consulted in September 2025 on requiring suppliers to offer at least one lower standing charge tariff. Following consultation feedback, it chose to run a limited pilot rather than introduce a market-wide requirement.^[1]

Instead of a blanket rule, Ofgem launched a limited one-year pilot scheme in June and July 2026. This trial is capped at around 150,000 customers across the country. Several of the UK's largest suppliers are taking part, offering low standing charge options rather than completely zero-charge tariffs.

Who actually saves money on these tariffs?

The higher unit rates mean that switching to a low or zero standing charge tariff is a gamble. Your exact energy usage decides whether you win or lose.

To save money on a zero standing charge tariff, you have to stay below a certain break-even point. This is the exact amount of energy where the savings from the daily fee match the extra cost of the higher unit rates. If you use less energy than the break-even point, you save money. If you use more, your bills will go up.

For most typical households in Great Britain, everyday activities like cooking, washing clothes, and heating the home in winter will push them well past this break-even point.

Current zero standing charge options for prepayment meters

If you want a true zero standing charge tariff today, your options are very limited. Currently, only two main suppliers offer them: Utilita and E Energy. Both of these suppliers only offer zero standing charge tariffs to customers with prepayment meters.

To make this work without losing money, both companies use a two-tier pricing system. This means they charge a very high unit rate for the first block of energy you use each day or month. Once you have used up that expensive first block, the unit rate drops to a more normal price for the rest of your usage.

This structure guarantees the supplier still collects enough money to cover the fixed network costs, as long as you use a basic amount of energy. It helps people who manage their budgets on a top-up meter avoid building up debt from daily fees when they have cut their usage down to the bare minimum.

How to check if you should switch

If your supplier invites you to join the July 2026 low standing charge trial, or if you are looking at a prepayment option, you need to do some quick maths before agreeing. Do not assume that removing the daily fee will automatically lower your bill.

If the new total is lower, the tariff is a good deal for you. If it is higher, you are better off staying on a standard price cap tariff and paying the daily fee.

Will standing charges ever be scrapped entirely?

It is highly unlikely that standing charges will be completely banned across the whole market. The infrastructure that keeps the lights on and the gas flowing costs billions of pounds a year to maintain. Those fixed costs have to be paid somehow.

If Ofgem forced all suppliers to scrap the standing charge and move all costs to unit rates, it would create a massive problem for vulnerable households. People living in poorly insulated homes, large families, and those relying on life-saving medical equipment would see their bills skyrocket. The current 2026 trials are designed to test if offering these tariffs as an option, rather than a strict rule, is a fairer way to manage the market.

Final verdict