In January 2025, energy customers across the UK will notice changes to the daily standing charges that appear on their energy bills. These standing charges have been a consistent feature of energy pricing, used to cover the cost of maintaining the energy network. The planned adjustments aim to offer more flexible payment options for energy customers, enabling them to choose from a range of tariff structures.
While these changes are designed to increase flexibility, the overall impact on household energy costs may be minimal, as these adjustments are focused more on how charges are distributed rather than reducing the total financial burden.
What Are Standing Charges and Why Are They So Controversial?
Standing charges are daily fees imposed by energy suppliers to cover the cost of maintaining and supplying energy to homes and businesses. These charges fund infrastructure maintenance, the building of new network capabilities, and the assurance of energy supply even if a supplier goes bankrupt. However, standing charges have been heavily criticized because they apply regardless of a customer’s energy consumption. This means that energy customers who use less energy end up paying a disproportionately higher share of these fixed costs.
Many campaigners argue that this fee structure is fundamentally unfair, as it disproportionately impacts low-energy users. For example, those who are more energy-conscious or live in smaller homes are still forced to pay the same daily fixed amount. Despite these concerns, Ofgem, the energy regulator, emphasized that standing charges cannot be eliminated entirely. Instead, they can only be redistributed across other areas of the bill, making them more flexible but not necessarily cheaper.
The New Tariffs: What’s Changing and What Isn’t
Under Ofgem’s new proposals, energy customers will be given more flexibility in how they pay their standing charges. Energy suppliers will be required to offer at least one tariff with lower standing charges, which can be incorporated into the unit rate. This approach allows households to pay less in daily fixed charges, depending on their usage. Ofgem believes this will give consumers more choice, helping them to find a plan that suits their energy consumption patterns.
However, it’s important to note that these changes may not result in significant savings for most energy customers. Ofgem has made it clear that standing charges cannot be fully eliminated. The fixed costs will simply be redistributed from one part of the bill to another.
Additionally, the regulator has dropped earlier plans for tariffs that offered zero standing charges but much higher unit rates, fearing that it would unfairly impact energy customers who rely on energy for medical reasons or have high usage.
One major concern is that second-home owners or those who leave properties vacant for long periods could take advantage of the new system. To prevent this, Ofgem is considering introducing a minimum usage threshold for the new tariffs. While these changes will offer more choices, the overall effect on energy customers’ bills will likely be minimal, and they are unlikely to bring about substantial reductions in energy costs.
According to a report from the Daily Record, Ofgem has launched a final consultation on the proposed changes, which will be decided by the end of 2025. If approved, the new tariffs could be available to energy customers by the end of January 2025.
Tim Jarvis, director general of markets at Ofgem, said:
We’ve listened to thousands of consumers that wanted to see changes to the standing charge and taken action. We have carefully considered how we can offer more choice on how they pay these fixed costs, however we have taken care to ensure we don’t make some customers worse off. After examining all the options available to us, we believe that the right way forward is to require all major suppliers to offer at least one tariff with a lower standing charge. This will deliver the choice we know customers want, without having a detrimental impact on customers that have high energy needs.
He added:
We cannot remove these charges, we can only move costs around. These changes would give households the choice they have asked for, but it’s important that everyone carefully considers what’s right for them as these tariffs are unlikely to reduce bills on their own.
Potential Impact: A Small Step Forward or Too Little, Too Late?
Despite the increased choice offered by these new tariffs, energy customers are unlikely to see significant reductions in their overall bills. As energy prices continue to rise, with a recent increase of 2% in October 2025, the financial burden on many households remains high. For instance, the annual cost for households on the standard tariff has risen from £1,720 to £1,755. In this context, even reduced standing charges may not provide much relief.
Consumer advocacy groups have expressed mixed reactions to the proposed changes. Martin McCluskey, the Minister for Energy Consumers, supported the changes, stating that energy customers should have the freedom to choose tariffs that suit their needs. He explained,
Consumers should have freedom and choice when choosing an energy tariff that works for them. This proposal will make more tariffs available on the market, giving people more options to pay lower standing charges if that suits their needs.
However, some consumer groups, such as Citizens Advice Scotland, are skeptical. David Hilferty, Director of Impact at Citizens Advice Scotland, said that while the new plans offer more choice, they don’t address the real issue:
Energy bills are not affordable for thousands of people across Scotland. Our evidence shows that, without major reform of the broken energy market, people will be suffering the cold and going without food or warmth as we head into the winter. Government and regulators know this and yet here we are facing another winter in which people will suffer. For us, that amounts to the toleration of harm.
It’s unacceptable and also avoidable. Government, regulators and energy companies all need to step up and urgently deliver lasting solutions like energy debt relief, and a social tariff for people on the lowest incomes.
Simon Francis, coordinator of the End Fuel Poverty Coalition, called the changes a “small step forward” but stressed that it was not enough. He added,
This development doesn’t negate the need for long-term reform to make the system fairer. It is essential that the industry ensures households properly understand the deals they are signing up for.
