Ofgem standing charge reform (2026): how much could you save?
A UK-focused guide to what Ofgem has consulted on, what may change, and how to estimate your household’s potential savings—plus practical steps you can take now.
- See example savings for low, typical and higher usage households (electricity and gas)
- Understand who benefits (and who could pay more) under different reform options
- Compare tariffs across the market with a postcode-based quote
Savings are estimates and depend on where you live, how you pay, meter type and the tariff you choose. Reforms are not guaranteed and timelines can change.
Fast answer: how much could you save?
If Ofgem reduces standing charges and shifts more cost into unit rates, many lower-usage homes could save—but some higher-usage homes could pay more. Because standing charges vary by region, meter type and payment method, your personal saving is best estimated by looking at your current standing charges and modelling a few “what if” options.
Important: “Standing charge reform 2026” refers to proposals and consultations. Final decisions, timing and exact figures may change. This page helps you estimate outcomes and make no-regrets tariff choices now.
Key takeaway #1
The standing charge is a daily fixed cost (electricity and gas) and you pay it even if you use no energy. Lower usage means the standing charge makes up a bigger share of your bill.
Key takeaway #2
Any reform that cuts standing charges typically raises unit rates to keep supplier revenue broadly similar. Whether you win depends mainly on your annual kWh usage.
Key takeaway #3
You don’t need to wait for reform to improve your costs: tariff differences today can outweigh likely standing charge changes. Comparing the market can be the simplest first step.
A quick way to sanity-check your potential saving
Find your current standing charges on a recent bill or in your online account. Multiply by 365 to see the annual fixed cost for each fuel. Then ask:
- If standing charges fell by £X per day, would any unit-rate rise offset it for my usage?
- Would I prefer lower fixed costs (good for low usage) or lower unit rates (good for high usage)?
- Do I have a prepayment meter or specific tariff where rules differ?
Typical bill structure (illustrative)
- Standing charge
- Daily fixed cost
- Unit rate
- Cost per kWh
- Other items
- VAT (5%), extras
Bills can also include debt repayment, add-ons (e.g. boiler cover) or arrears—these aren’t changed by standing charge reform.
What is Ofgem standing charge reform (and why 2026)?
Standing charges cover a range of fixed costs associated with supplying energy, including network costs and policy costs that don’t vary much with usage. In recent years, standing charges have been a flashpoint because they affect customers who use less energy (including some vulnerable households) and they’re paid even when you’re away from home.
Ofgem has been considering options to rebalance how these fixed costs are recovered. “2026” is often discussed because reforms—if adopted—take time to consult on, finalise, and then implement through industry systems and tariff structures.
Plain-English summary: reform could mean lower standing charges but higher unit rates, or new tariff structures that reduce fixed costs for some households.
What might change (common options discussed)
- Reduce standing charges and recover more cost through unit rates (usage-based).
- Introduce/encourage zero-standing-charge tariffs (higher unit rates instead).
- Change how some policy costs are collected (e.g. moving certain costs away from electricity bills—this is policy-led and not solely Ofgem’s choice).
- Protect certain groups (for example, targeted support for vulnerable customers or those unable to switch, subject to final policy design).
What won’t change
- Your energy use still matters: kWh is usually the biggest driver of cost for medium and high-usage homes.
- Regional differences won’t vanish overnight: distribution network costs vary by area.
- VAT (5%) remains unless government changes it.
Compare tariffs now (whole of market)
Because reform details aren’t final, a no-regrets move is checking whether you can reduce costs today. We’ll show options based on your postcode, payment method and meter type (where available).
Tip: If you’re on a fixed tariff, check for exit fees before switching. If you’re on a variable tariff, exit fees are usually not applied (but always confirm in your tariff terms).
What you’ll need
- Your postcode (to identify regional rates)
- Whether you pay by Direct Debit, cash/cheque, or prepayment
- Your meter type (standard credit, smart meter, Economy 7, prepay)
Two realistic savings scenarios (with assumptions)
Below are worked examples to show the trade-off: lower standing charges vs higher unit rates. These are illustrative estimates (not a prediction of Ofgem’s final numbers).
Assumption for both scenarios: standing charge falls by 10p/day for electricity and 10p/day for gas (saving £73/year per fuel). To keep overall costs similar, unit rates rise by ~0.5p/kWh for electricity and ~0.2p/kWh for gas. VAT ignored for simplicity.
Scenario A: low usage flat (benefits more)
Household: 1–2 people in a well-insulated flat.
Usage: 1,800 kWh electric / 6,000 kWh gas per year.
- Standing charge saving: £73 (elec) + £73 (gas) = £146/year
- Extra unit cost: 1,800 × £0.005 = £9 (elec) + 6,000 × £0.002 = £12 (gas) = £21/year
- Estimated net change: £146 - £21 = ~£125/year cheaper
If your standing charges are higher than average in your region, the upside for low usage can be larger.
Scenario B: larger family home (could break even or pay more)
Household: 4 people in a detached/semi-detached home.
Usage: 4,200 kWh electric / 18,000 kWh gas per year.
- Standing charge saving: £73 (elec) + £73 (gas) = £146/year
- Extra unit cost: 4,200 × £0.005 = £21 (elec) + 18,000 × £0.002 = £36 (gas) = £57/year
- Estimated net change: £146 - £57 = ~£89/year cheaper
If unit-rate increases were larger than assumed, higher-usage homes could see smaller savings—or a bill increase.
Your break-even point (rule of thumb)
A simple way to think about it: you “spend” your standing charge saving on higher unit rates. With the assumptions above, your annual break-even is roughly:
- Electricity: £73 ÷ £0.005 ˜ 14,600 kWh/year
- Gas: £73 ÷ £0.002 ˜ 36,500 kWh/year
Most households use less than these levels, but the real break-even depends on the final reform design and your regional standing charges.
Comparison: how different standing-charge approaches may affect you
This table helps you decide what to watch for in 2026—and how to choose a tariff today if you’re trying to manage standing charges.
| Approach | Who it tends to suit | Potential downsides | What to check before switching |
|---|---|---|---|
| Lower standing charge Higher unit rate |
Low usage homes; people away from home often; some flats | Higher usage can cost more; less certainty if usage rises in winter | Your annual kWh; whether rates change after a fix ends; exit fees |
| Zero/very low standing charge tariff Much higher unit rate |
Very low usage; second homes; some all-electric studio flats | If usage increases, it can quickly become expensive | Seasonal usage pattern; heating type; whether you can revert without fees |
| Higher standing charge Lower unit rate |
Higher usage families; electric heating; EV charging (high kWh) | Harder to cut costs if you reduce usage; you pay more even with low use | Time-of-use options; smart meter suitability; peak/off-peak rates |
| Targeted support / social tariff-style discounts (policy-led) |
Eligible low-income/vulnerable households (if introduced) | Eligibility rules can be strict; may require application and evidence | Eligibility criteria; whether switching affects discount; how it’s applied on bills |
Decision checklist: does a lower standing charge approach suit you?
- Likely suits you if you have low annual usage, a small household, a well-insulated home, or you’re frequently away.
- Be cautious if your usage is high (large family, electric heating, lots of home working), or you’re planning changes that increase usage (EV, heat pump).
- Double-check if you’re on Economy 7 or a time-of-use tariff—standing charge is only one part of the picture.
Quick actions you can take now
- Check your current standing charges (elec + gas) and note your payment method.
- Look up (or estimate) your annual kWh usage from bills or your smart meter app.
- Compare tariffs and consider the whole annual cost, not only the standing charge.
Costs, exclusions and common pitfalls
Standing charge reform headlines can be misleading. Here are the practical gotchas that can change your outcome.
1) Region matters (a lot)
Standing charges vary across Great Britain because electricity distribution charges differ by region. Your friend’s saving estimate may not match yours even with similar usage.
2) Payment method and meter type
Prepayment meter (PPM) pricing and rules can differ. Economy 7 and time-of-use tariffs can have different standing charges and multiple unit rates.
3) Exit fees and fixed-term timing
Some fixed tariffs include exit fees. If you’re near the end date, waiting a few weeks may avoid fees—always check your tariff’s terms.
4) Don’t compare standing charge in isolation
A low standing charge can come with a much higher unit rate. The only fair comparison is estimated annual cost using your own kWh (or a realistic estimate).
Reminder: If you have debt on your meter/account, switching may be restricted or managed differently. Citizens Advice can help if you’re unsure.
Common misunderstanding: “If standing charges drop, everyone saves”
Not necessarily. If unit rates rise to compensate, higher-usage homes may see smaller savings or potentially pay more. This is why reform debates focus on fairness between low and high usage, and how to support vulnerable households.
FAQs
Will Ofgem definitely change standing charges in 2026?
No. Ofgem can consult and propose changes, but final outcomes and timelines can shift. Treat 2026 as a potential timeframe rather than a guarantee.
How do I find my current standing charge?
Check your latest bill, statement, or your supplier app/online account. It’s usually shown as a p/day amount for electricity and gas. If you have Economy 7, it may still be one standing charge but you’ll have separate day/night unit rates.
Would a standing charge cut reduce my Direct Debit immediately?
Not always. Direct Debits are often set using annual forecasts and your account balance. If prices change, your supplier may update your payment amount at their next review, or you can request a review.
Do prepayment meter customers pay different standing charges?
They can. Pricing can differ by payment method and meter type, and the way standing charges are collected on prepay can vary. If you’re on prepay, compare like-for-like tariffs and check how the standing charge is applied.
If I switch now, could I miss out on a future reform benefit?
If reform applies across default tariffs (e.g. within the price cap structure), it would typically affect suppliers broadly, but the detail matters. The bigger immediate risk is switching onto a fixed tariff with exit fees if you expect to switch again soon. Consider fixes with low/no exit fees if flexibility is important.
Does standing charge reform affect Northern Ireland?
Energy regulation differs in Northern Ireland. Ofgem is the regulator for Great Britain (England, Scotland and Wales). If you’re in Northern Ireland, standing charges and tariff rules may be set differently by local market arrangements.
Could my bill go up even if the standing charge goes down?
Yes. If unit rates rise enough (or your usage is high), the increased kWh cost can outweigh the standing charge reduction. Always look at the annual cost using your usage figures.
What if I don’t know my annual kWh usage?
Use a recent year of bills if you can. If not, use your smart meter app/history, or estimate based on household size and heating type. Any quote is more accurate when you can provide real kWh.
Trust, methodology and sources
Page ownership
- Written by
- EnergyPlus Editorial Team
- Reviewed by
- Energy Specialist
- Last updated
- February 2026
How we assess “how much could I save”
Because final reforms and tariff responses can’t be known in advance, we use scenario modelling to show the direction and magnitude of change under plausible adjustments:
- Inputs: annual kWh usage (electricity and gas), current standing charges (p/day), and a hypothetical change in standing charge paired with a compensating unit-rate change.
- Outputs: estimated annual bill difference before VAT and excluding non-energy add-ons.
- Limitations: actual changes may differ by region, payment method, meter type and supplier strategy; time-of-use tariffs may not follow the same pattern; bills can be affected by debt repayment plans and meter exchanges.
What we don’t do: we don’t promise a specific £ saving for 2026. We show transparent examples and recommend comparing actual tariffs available to you today.
Want a clearer answer for your home?
Get a whole-of-market quote based on your postcode and details. We’ll help you compare standing charges, unit rates and estimated annual costs—so you can decide with confidence.
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