{"id":104165,"date":"2025-02-14T08:00:00","date_gmt":"2025-02-14T08:00:00","guid":{"rendered":"https:\/\/en.econostrum.info\/uk\/?p=104165"},"modified":"2025-02-13T23:58:51","modified_gmt":"2025-02-13T23:58:51","slug":"octopus-energy-676-daily-standing-charge","status":"publish","type":"post","link":"https:\/\/en.econostrum.info\/uk\/octopus-energy-676-daily-standing-charge\/","title":{"rendered":"Octopus Energy Customers Offered \u00a3676 as Daily Standing Charge is Scrapped"},"content":{"rendered":"\n<p>Energy regulator <strong>Ofgem<\/strong> has announced new rules requiring suppliers to offer <strong>zero standing charge tariffs<\/strong>, a move that could lead to <strong>substantial savings for low-energy users<\/strong>. The decision comes amid widespread criticism of <strong>daily standing charges<\/strong>, which currently add <strong>an average of \u00a3338 per year<\/strong> to household energy bills\u2014regardless of actual energy consumption.<\/p>\n\n\n\n<p>Under the new system, Octopus Energy customers on a two-year fixed tariff could save up to \u00a3676 if standing charges were scrapped today. The changes are aimed at helping consumers manage energy costs more effectively, particularly those who use <strong>less electricity and gas<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How Standing Charges Affect Energy Bills<\/strong><\/h2>\n\n\n\n<p>A <strong>standing charge<\/strong> is a fixed daily fee that energy suppliers add to <strong>gas and electricity bills<\/strong>, covering network maintenance and operational costs. This charge applies <strong>even if no energy is used<\/strong>, meaning low-energy households pay a disproportionately high amount relative to their consumption.<\/p>\n\n\n\n<p>Currently, the average <strong>dual-fuel household pays around \u00a3338 per year<\/strong> in standing charges alone. Consumer finance expert <strong>Martin Lewis<\/strong> has criticised this system, describing it as a:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;\u00a3388-a-year poll tax on energy bills, which are a moral hazard disincentivising lower users from cutting their bills.&#8221;<\/p>\n<\/blockquote>\n\n\n\n<p>The argument against standing charges has been gaining momentum, with tens of thousands of consumers calling for them to be scrapped altogether. However, Ofgem has opted for a middle ground, requiring suppliers to offer <strong>a zero standing charge option<\/strong>, while still allowing standard tariffs to exist.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Who Benefits from Zero Standing Charge Tariffs?<\/strong><\/h2>\n\n\n\n<p>The introduction of <strong>zero standing charge tariffs<\/strong> is expected to significantly benefit lower energy users, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Small households or individuals living alone<\/li>\n\n\n\n<li>People with second homes, who may only use energy seasonally<\/li>\n\n\n\n<li>Energy-conscious consumers who actively reduce their consumption<\/li>\n<\/ul>\n\n\n\n<p>For these users, the removal of standing charges means that their bills will be based purely on the <strong>amount of energy they consume<\/strong>, potentially leading to hundreds of pounds in savings per year.<\/p>\n\n\n\n<p>However, for <strong>higher energy users<\/strong>, the impact will be <strong>less clear-cut<\/strong>. Zero standing charge tariffs typically shift costs to the unit rate, meaning that while daily fees disappear, the price per kilowatt-hour (kWh) of <a href=\"https:\/\/en.econostrum.info\/uk\/energy-bills-concerns-despite-price-drop\/\" data-type=\"post\" data-id=\"102160\">energy <\/a>could be <strong>higher<\/strong>. This means that:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Households with <strong>high energy consumption<\/strong>, such as those with medical equipment requiring constant power, may not see any real savings.<\/li>\n\n\n\n<li>Those who use a <strong>moderate amount of energy<\/strong> will need to carefully compare tariffs to determine the best deal.<\/li>\n<\/ul>\n\n\n\n<p>According to <strong>Tim Jarvis, director general of markets at Ofgem<\/strong>:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;Many people feel very strongly that standing charges are unfair and prevent them from managing their bills effectively.<\/p>\n\n\n\n<p>We want to give consumers the ability to make the choice that\u2019s right for them, without putting any one group of consumers at a disadvantage.&#8221;<\/p>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>When Will the Changes Take Effect?<\/strong><\/h2>\n\n\n\n<p>Ofgem has <strong>set a deadline for energy suppliers<\/strong> to introduce zero standing charge options by next winter. Some providers, including <strong><a href=\"https:\/\/www.express.co.uk\/finance\/personalfinance\/2013876\/octopus-energy-676-daily-charge-ditched\" target=\"_blank\" rel=\"noopener\">Octopus Energy<\/a><\/strong>, already offer low or no standing charge tariffs, but these have often come with <strong>higher unit rates<\/strong>.<\/p>\n\n\n\n<p>The new regulations will ensure that <strong>every supplier provides a clear alternative<\/strong> to standard tariffs, giving consumers greater flexibility in how they manage their bills.<\/p>\n\n\n\n<p>Additionally, from <strong>1 January 2025<\/strong>, Ofgem has already implemented <strong>a slight reduction in standing charges<\/strong> on standard variable tariffs:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Electricity standing charges dropped from 60.99p to 60.7p per day<\/li>\n\n\n\n<li>Gas standing charges fell from 31.66p to 31.65p per day<\/li>\n<\/ul>\n\n\n\n<p>While these reductions are <strong>minimal<\/strong>, the wider introduction of <strong>zero standing charge tariffs<\/strong> is expected to provide a more meaningful impact for households looking to <strong>cut their energy costs<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What This Means for Consumers<\/strong><\/h2>\n\n\n\n<p>For consumers, the key takeaway is that <strong>choice is expanding<\/strong>. If you are a <strong>low energy user<\/strong>, switching to a <strong>zero standing charge tariff<\/strong> could dramatically reduce your energy costs. However, it\u2019s essential to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Compare tariffs carefully to ensure that a higher unit rate doesn\u2019t cancel out potential savings.<\/li>\n\n\n\n<li>Monitor supplier announcements in the coming months to see what new tariff options become available.<\/li>\n\n\n\n<li>Consider whether a fixed-rate or variable tariff is better suited to your energy consumption habits.<\/li>\n<\/ul>\n\n\n\n<p>While this move doesn\u2019t <strong>eliminate standing charges completely<\/strong>, it marks a <strong>significant shift towards more flexible pricing<\/strong>. With energy bills remaining a major concern for households, these changes could provide meaningful relief for those struggling with high fixed costs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Octopus Energy customers could be offered \u00a3676 under new plans to scrap daily standing charges, following a major shake-up by Ofgem. The change aims to make energy billing fairer, particularly for low-usage households, but it may not benefit everyone. With suppliers set to introduce new tariffs, what does this mean for your energy bills?<\/p>\n","protected":false},"author":4,"featured_media":103240,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[],"class_list":["post-104165","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33","no-featured-image-padding"],"_links":{"self":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/104165","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/comments?post=104165"}],"version-history":[{"count":1,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/104165\/revisions"}],"predecessor-version":[{"id":104166,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/104165\/revisions\/104166"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/media\/103240"}],"wp:attachment":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/media?parent=104165"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/categories?post=104165"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/tags?post=104165"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}