Low standing charge energy tariffs are here, but will they actually save you money?

Energy customers frustrated by paying a daily charge before they’ve even switched on a light could soon have a new option. Following a lengthy consultation, Ofgem has confirmed the next step in its plans to introduce lower standing charge tariffs, with major suppliers now beginning to roll out trial tariffs designed to give consumers more choice over how they pay for their energy. For some households, these new tariffs could reduce energy bills. But for others, they may end up costing more.

Here’s what you need to know before making the switch.

What is a standing charge?

A standing charge is the fixed daily amount you pay for your gas and electricity, regardless of how much energy you use. It helps cover the costs of maintaining the energy network, operating meters, and funding various schemes that support the UK’s energy system. That means even if you use no energy on a particular day, you’ll still pay the standing charge.

Standing charges have become one of the most controversial parts of energy bills in recent years, particularly for people who use relatively little energy, such as those living alone or spending long periods away from home.

What’s changing?

Rather than scrapping standing charges altogether, Ofgem is requiring suppliers taking part in the trial to offer an alternative tariff with a significantly lower standing charge.

Participating suppliers are expected to reduce standing charges by around £150 a year for a typical dual-fuel customer. However, the overall cost of supplying energy doesn’t change. Instead, suppliers recover that money through higher unit rates, the amount you pay for each kilowatt hour (kWh) of gas or electricity you use.

In other words, you’re changing how you pay for energy, not necessarily how much you pay overall.

These are trial tariffs, and every supplier is doing things differently

It’s important to note that these aren’t standard tariffs being rolled out across the entire market. Instead, they’re limited trials involving several major suppliers, including EDF, E.ON Next and Octopus Energy, with British Gas also expected to introduce an option.

Each supplier is taking a different approach. Some are offering dedicated lower standing charge tariffs, while others are applying discounts or structuring the tariffs differently.

That means there isn’t a single “low standing charge tariff”, so it’s worth comparing each offer carefully rather than assuming they’re all the same.

Who could benefit?

Lower standing charge tariffs are most likely to benefit households that consistently use relatively small amounts of energy.

This could include:

people living alone
households that spend long periods away from home
owners of second homes or holiday properties
households that have invested in energy efficiency measures
some homes with solar panels that import relatively little electricity from the grid.

Because these households buy fewer units of energy, the savings from paying a lower daily charge may outweigh the higher unit price.

When might they not be the best option?

For households with average or high energy use, the maths can quickly work the other way.

You may be better off sticking with a traditional tariff if you:

have a larger family
work from home most days
rely on electric heating
charge an electric vehicle at home
have a heat pump
use more gas or electricity than average.

Although you’ll pay less every day in standing charges, the higher price for every unit of energy you use could leave you paying more over the course of the year.

So, generally:

Lower energy use: lower standing charge tariffs could save you money.
Higher energy use: the increased unit rates could outweigh any savings.

Don’t be fooled by the headline figure

A lower standing charge may sound attractive, but remember, it’s only one part of your energy bill. A tariff advertising standing charges that are £150 a year lower could still work out more expensive overall if the unit rates are significantly higher.

The cheapest tariff isn’t the one with the lowest standing charge, it’s the one with the lowest overall annual cost based on how much energy your household actually uses.

Compare using kWh, not your monthly Direct Debit

Before switching, check your annual gas and electricity usage, measured in kilowatt hours (kWh). You’ll usually find this on your annual statement or recent bills.

Using your annual consumption allows you to estimate what different tariffs would cost over a year. Comparing based only on your monthly Direct Debit can be misleading, as payments are often spread evenly across the year and don’t always reflect actual energy use.

Think about how your energy use might change

Even if a lower standing charge tariff looks like the cheapest option today, it’s worth considering whether your circumstances are likely to change during the life of the tariff.

For example, your energy use could increase if you:

start working from home more often
buy an electric vehicle
install a heat pump
have a new baby
spend more time at home during retirement
experience a colder-than-average winter.

Likewise, if you’re planning to downsize, improve your home’s energy efficiency or spend more time away, a lower standing charge tariff may become more attractive.

Always check the small print

As these products are currently being introduced through trial schemes, not everyone will be eligible straight away.

Before switching, check:

whether you’re eligible
whether the tariff is fixed or variable
how long the tariff lasts
whether there are exit fees if you leave early
whether another fixed tariff could still work out cheaper overall.

Resolver’s top tips before switching

Before choosing a lower standing charge tariff, ask yourself:

Do I know roughly how many kWh of gas and electricity I use each year?
Am I comparing the total annual cost rather than just the standing charge?
Is my energy use likely to change over the next 12 months?
Have I checked for exit fees or eligibility restrictions?
Have I compared this tariff against other fixed and variable deals currently available?

Ofgem says the aim of these new tariffs is to give consumers greater choice, not to create a one-size-fits-all solution. For households with low energy use, a lower standing charge tariff could offer genuine savings. But for many families and higher-energy users, paying more for every unit of gas and electricity could outweigh the benefit of a lower daily charge.

The key is to look beyond the headline. Before switching, compare the total annual cost based on your own energy use, not just the standing charge. A tariff that looks cheaper at first glance may not be the one that leaves more money in your pocket.