Zero Standing Charge Tariffs: What you need to know

As a quick reminder, a standing charge is a daily fee included in your gas and electricity bills, paid regardless of how much energy you actually use. This charge covers fixed costs involved in delivering energy to homes across the country.

These fixed costs include maintaining and upgrading infrastructure, such as power lines and gas pipes, funding government-backed initiatives like the Warm Home Discount scheme, administrative expenses incurred by energy companies, and emergency provisions to cover costs if an energy supplier collapses.

The standing charge ensures these essential services and protections continue to be funded even if you use no energy on a particular day.

Why is Ofgem introducing zero standing charge tariffs?

Standing charges have significantly increased since 2021, nearly doubling in many regions. This sharp increase has a big impact on households that use minimal energy, such as single-occupancy flats, holiday homes, or properties equipped with solar panels.

These households end up paying more than they should for the energy they actually use, which has led to frustration. Ofgem wants to fix this by offering energy tariffs with no standing charges. This would reward people who use less energy, encourage saving, and make bills feel fairer.

This move also aligns with broader environmental goals, as it incentivises consumers to lower their energy use and reduce their carbon footprint.

Ofgem’s detailed zero standing charge proposal

Starting winter 2025/26, Ofgem will require every energy supplier to offer at least one tariff option without a standing charge. The fixed costs currently covered by standing charges will instead be built into the per-unit cost of energy consumed.

Ofgem is evaluating three potential tariff structures to achieve fairness and clarity:

• Flat rate: Each kilowatt-hour (kWh) consumed has the same cost.
• Falling-block rate: Charges start high per unit but decrease once a certain usage threshold is reached.
• Rising-block rate: Charges start lower but increase significantly once a certain threshold is exceeded, protecting smaller consumers.

These changes can be implemented directly through Ofgem’s existing regulatory powers without the need for additional legislation.

Progress to Date

• 20 Feb – 20 Mar 2025: Ofgem conducted a public consultation, receiving over 40,000 responses, showing significant public interest and support for reforming standing charges.
• 23 May 2025: Ofgem announced plans to publish detailed implementation steps and timelines by summer 2025 as part of its Forward Work Programme.
• July 2025: An unrelated 6% reduction in existing standing charges offered temporary financial relief to consumers.

Important Upcoming Dates

• Summer 2025: Ofgem will release a comprehensive decision outlining specific tariff designs and initiate necessary licence modifications for suppliers. Suppliers and consumer groups will have an opportunity to review and provide feedback on the proposed regulations.
• Autumn 2025: Energy suppliers will upgrade their billing systems, and price comparison websites will adapt to clearly display zero standing charge options. Training for customer service representatives and informational campaigns will also be rolled out to ensure smooth implementation and customer understanding.
• 1 Oct 2025: Official launch of the first zero standing charge tariffs, providing consumers with new choices ahead of winter, a high-energy use season. Initial tariffs are expected primarily from challenger and smaller energy suppliers, with larger suppliers following soon after.

Potential winners and losers

• Low energy users (holiday homes, solar-powered properties, single occupants): If you are a low energy user, then you are likely to achieve substantial savings, potentially reducing annual bills by £100 to £150 due to eliminating daily charges. This makes zero-charge tariffs highly appealing for those committed to energy efficiency.
• Average households: If you’re an average user, then you’ll likely experience minimal financial changes, as higher unit rates balance out the elimination of the standing charges, resulting in similar overall costs. However, you could still benefit slightly by focusing on further energy-saving measures.
• High-energy or medically dependent users: If you’re a high-energy user, choosing a tariff with no standing charge might mean your bills go up. For people who need a lot of energy regularly, standard tariffs may still be the better option. Ofgem has said it will make sure vulnerable groups aren’t unfairly affected and will keep a close eye on how these changes impact them.

Current zero-standing-charge availability

Currently, zero standing charge tariff availability is limited to two main suppliers.:

• Utilita and E Energy: Offer zero standing charge tariffs specifically for prepayment meters, structured with a two-tier pricing system, initially charging higher unit rates. These are primarily aimed at households that manage their energy budgets through prepayment.

How to prepare for the new tariffs

• Low energy users: Plan to compare tariffs in early October 2025 so you can benefit from any savings as soon as the new tariffs become available. Keeping a record of your past energy use will help you choose the best option for your needs.
• Average users: Keep an eye on your energy usage and look for ways to improve efficiency at home. Make sure you stay informed about which tariff is most cost-effective for your household.
• High-energy or medically dependent households: If the new zero standing charge tariffs turn out to be more expensive for you, consider sticking with or switching back to a tariff that includes a standing charge. It’s a good idea to get advice from an energy advisor or consumer group to help you choose the best option.

Try our Standing Charge cost calculator

We have created a quick calculator below where you can experiment with different standing charges to see how much they add up over the course of a day, month, week and year. You should be able to find your standing charges on your latest energy bill.

Frequently Asked Questions (FAQs)

• Will my tariff automatically change to a zero standing charge option?

No, you’ll need to actively choose a zero standing charge tariff once they are available.

• Can I frequently switch between tariffs?

Ofgem might implement limits on how often consumers can switch to prevent misuse or manipulation of tariff options. Clarity on this restriction will be available in Ofgem’s final decision.

• What if my property uses no energy for long periods?

With zero-charge tariffs, you will pay nothing during times when your energy consumption is zero, making these tariffs ideal for intermittent usage properties.

• Are prepayment meters included in the new tariffs?

Yes, zero standing charge tariffs will be available for prepayment meters. However, your meter must be a smart meter to support these tariffs fully. Customers on older meters will need to upgrade.

• Will this reduce overall energy costs?

No, overall energy costs will remain broadly unchanged. The tariffs redistribute fixed costs from daily charges into unit rates, ensuring overall revenue neutrality.