Why Energy Bill Standing Charges Matter

Tags: cost of living crisis, Energy Bills, energy debt, Energy News, energy price cap, Energy Tariffs, fuel poverty, gas and electricity, Ofgem, social housing, Standing Charges, UK energy industry, UK Energy Prices

Ofgem recently announced that the energy price cap will rise by 0.2% from January – March 2026, a relatively modest increase.

For the average dual-fuel household paying by Direct Debit, this equates to about 28p extra per month and brings the annual bill under the cap to £1,758.

But a perhaps less visible yet important component of that bill is the standing charge, which is also going up and this has real implications for households.

What Is a Standing Charge?

A standing charge is a fixed daily fee that customers pay regardless of how much energy they use.

It’s designed to help recover the constant costs energy companies incur; maintaining the network, keeping pipes and wires running, paying staff, and covering the infrastructure that delivers energy to your home.

Why Are Standing Charges Increasing?

According to Ofgem, standing charges will rise by 2% for electricity and 3% for gas under the new cap.

These increases are driven not just by network and operating costs, but also by policy costs, for example, costs related to the Warm Home Discount scheme, which helps lower-income or vulnerable households, are being factored in.

Impact on Household Energy Bills

Low-consumption households suffer more, because standing charges are fixed daily costs, they take up a larger share of bills for households that use relatively little energy.
As standing charges rise, even if you’re careful with your usage, your baseline costs go up. That can undermine the benefits of reducing usage for some.
Unlike the unit rate (the price you pay per kWh), which varies based on how much energy you use, the standing charge is inescapable, you pay it even if you use no gas or electricity on a given day.
Standing charges vary across different parts of the UK, which means the impact isn’t uniform.

Longer-Term Debate

There’s an ongoing debate about whether standing charges are fair, particularly for low-usage households. Energy UK has highlighted that rising standing charges disproportionately affect those who consume less.

Ofgem has considered and is still discussing a ‘no standing charge’ tariff. Under this model, the fixed cost would be shifted into a higher unit rate instead.

However, the trade-off is complex: while some households might benefit, others, especially high energy users, could end up paying more overall once the fixed costs are redistributed.

What Can Households Do?

Consider how you pay: Ofgem recommends paying by Direct Debit where possible, as this is often more cost-effective.
Seek support if you’re struggling, by contacting your supplier about tailored repayment plans or help.
Shop around, as not all tariffs have the same standing charge, some fixed or alternative tariffs might make sense depending on your usage.

While the 0.2% rise in the price cap might sound small, the increase in standing charges is a reminder that fixed costs remain a significant part of household energy bills, especially for those who use less energy.

Read our blog from earlier this year on how standing charges matter to social landlords here.