Ofgem standing charge reform 2026 savings calculator
Estimate how proposed 2026 standing charge changes could affect your household bill, then compare whole-of-market tariffs with confidence.
- See the break-even point: when a lower standing charge beats a higher unit rate
- Works for electricity and gas (separately), by your usage and payment method
- Includes examples, caveats, and a clear “who it suits” checklist
Estimates only. Ofgem decisions, supplier pricing, your region, meter type and payment method can change results.
Fast answer: will standing charge reform save you money?
Potentially — but it depends on how much energy you use and whether any cut to the standing charge is offset by a higher unit rate (p/kWh). The simplest way to think about it is a break-even test:
Break-even rule (per fuel): A lower standing charge helps you when the annual standing charge saving is more than any extra you pay from a higher unit rate.
Most likely to benefit
- Low-use households (small flats, single occupants)
- Homes with long periods away (e.g., travel, second home)
- All-electric homes with careful consumption (depends on unit rates)
May see little change
- Average-use households on competitive tariffs already
- Homes where unit rates rise by a similar amount
- Those with limited supplier choice (some meter types)
Could be worse off
- High-use households if unit rates increase materially
- Some prepayment setups if prices move differently
- If you switch to a tariff with exit fees you later regret
This page helps you estimate outcomes safely, using transparent assumptions — and then compare whole-of-market options for your postcode.
Savings calculator (estimate)
Use this simple framework to estimate whether a lower standing charge could help you. You can do the maths with your current tariff information (from a bill, app, or online account).
What “standing charge reform” usually means: proposals can reduce the daily fixed charge, but suppliers may recover costs elsewhere (often via the unit rate). The result can be a rebalancing, not a guaranteed cut.
Step 1: collect your inputs
- Your annual usage in kWh (electricity and gas separately).
- Current standing charge (p/day) and current unit rate (p/kWh).
- Estimated reformed standing charge (p/day) and estimated reformed unit rate (p/kWh) for comparison.
- Your payment method (Direct Debit, standard credit, prepayment) and meter type (standard, smart, Economy 7, etc.) — these can change pricing.
Step 2: do the break-even calculation (per fuel)
Annual standing charge saving
(Current standing charge - New standing charge) × 365
Convert pence to pounds by dividing by 100.
Annual unit-rate difference
(New unit rate - Current unit rate) × Annual kWh
If this is negative, the new unit rate is cheaper.
Estimated annual impact: Standing charge saving - Unit-rate difference. Positive = estimated saving; negative = estimated extra cost.
Step 3: sanity checks (UK-specific)
- Region matters: standing charges and unit rates vary by distribution region.
- Payment method matters: Direct Debit vs prepayment can price differently.
- Meter type matters: Economy 7 and some legacy meter setups have different rates/standing charges.
- Dual fuel: do electricity and gas separately, then add the results.
Two realistic examples (with numbers)
These scenarios are illustrative to show how the break-even works. They are not a prediction of Ofgem’s final approach or supplier pricing.
Scenario A: low-use electric flat (likely to benefit)
- Assumptions
- Electricity use: 1,600 kWh/year. Standing charge falls by 25p/day. Unit rate rises by 1.0p/kWh.
- Calculation
- Standing charge saving: 25p × 365 = 9,125p = £91.25
- Extra unit cost: 1.0p × 1,600 = 1,600p = £16.00
- Estimated impact: £91.25 - £16.00 = £75.25 saving/year
Why it works: low usage means the unit-rate increase doesn’t outweigh the fixed-charge cut.
Scenario B: family home, higher use (could be worse off)
- Assumptions
- Electricity use: 4,200 kWh/year. Standing charge falls by 20p/day. Unit rate rises by 1.2p/kWh.
- Calculation
- Standing charge saving: 20p × 365 = 7,300p = £73.00
- Extra unit cost: 1.2p × 4,200 = 5,040p = £50.40
- Estimated impact: £73.00 - £50.40 = £22.60 saving/year
If the unit rate rose by ~1.8p/kWh instead, this household would likely pay more overall.
Quick break-even shortcut: Break-even usage (kWh/year) ˜ (Standing charge saving per year in pence) ÷ (Unit rate increase in p/kWh).
Compare tariffs for your home (whole of market)
If you want a concrete estimate, we can match you with tariffs available for your postcode and preferences. This is usually more reliable than guessing future reforms.
What to have ready (optional, but improves accuracy)
- Latest bill or app screenshot with kWh and tariff name
- Your meter type (smart, standard, Economy 7)
- Whether you’re on a fixed tariff and any exit fee
Compare options: lower standing charge vs lower unit rate
If reforms lead to new tariff structures, the practical choice often becomes: do you want to pay more per day (standing charge) and less per kWh, or the other way around?
| Option | Best for | Watch outs | What to check before switching |
|---|---|---|---|
| Lower standing charge, higher unit rate | Low usage; empty home often; small households | If your usage rises (cold winter, WFH), costs can climb quickly | Unit rate p/kWh, price cap alignment, any exit fee |
| Higher standing charge, lower unit rate | Higher usage; larger households; electric heating/EV charging (often) | You pay more even when you use very little (e.g., summer) | Standing charge p/day, whether you’re likely to reduce usage |
| Time-of-use/Economy 7 style | People who can shift usage to cheaper hours (laundry, EV) | Wrong usage pattern can be expensive; day rate may be higher | Your day/night split, meter compatibility, supplier terms |
Decision checklist (quick and practical)
This approach suits you if…
- You know your annual kWh (or can estimate from past bills)
- You’re comparing tariffs on total annual cost, not a single headline rate
- You can avoid exit fees (or savings clearly exceed them)
- You understand your meter type and payment method constraints
It may not suit you if…
- Your usage is changing soon (moving home, new baby, heat pump, EV)
- You’re on a complex multi-rate tariff and can’t confirm your split
- You have limited tariff availability due to meter/prepayment setup
- You’re mid-fixed tariff with high exit fees and uncertain savings
Costs, exclusions & common pitfalls to avoid
Standing charges are only one part of the bill. Here are the things that most commonly skew “savings” calculations in the UK.
Exit fees and fixed terms
Some fixed tariffs charge an exit fee per fuel. Include it when comparing a switch today vs waiting. If you’re within a switching window, fees may not apply — check your tariff documents.
Prepayment and meter constraints
Availability and pricing can differ for prepayment (including smart PAYG). Some tariffs require smart meters or exclude certain legacy meters.
Economy 7 / multi-rate confusion
If you have day/night rates, a single “unit rate change” assumption may be wrong. Use your actual split (kWh day vs night) where possible.
Regional variation (often overlooked)
Network costs vary by region, which feeds into capped standing charges and unit rates. Two homes with identical usage can see different results in different postcodes.
VAT and bill timing
Domestic energy bills typically include 5% VAT. If you compare prices from different dates or cap periods, you can accidentally mix tariffs that aren’t directly comparable.
Important: Ofgem consultations can change before implementation. Treat any “2026 reform” numbers online as provisional unless they’re confirmed in Ofgem’s published decision documents.
FAQs
What is a standing charge on UK energy bills?
A standing charge is a daily fixed cost you pay to have a gas/electricity supply. It’s separate from the unit rate (p/kWh). It can cover costs like network maintenance and metering, depending on how tariffs are structured.
Will Ofgem reduce standing charges in 2026?
Ofgem may consult on changes to how charges are recovered, but outcomes can change. Even if standing charges fall, suppliers can rebalance costs into unit rates. Use this page to estimate the impact rather than assuming a guaranteed saving.
How do I find my current standing charge and unit rate?
Check your latest bill (paper/PDF), your supplier app, or your online account under “tariff information” or “prices.” For Economy 7, you may see separate day and night unit rates.
Does the standing charge differ by region and payment method?
Yes. Electricity and gas pricing can vary by distribution region and by how you pay (Direct Debit, standard credit, prepayment). That’s why postcode and payment method matter for comparisons.
If standing charges fall, should I wait to switch?
Not always. If a good tariff is available now, waiting could mean paying more in the meantime — and reforms might not reduce your total cost if unit rates rise. Consider your current deal, any exit fee, and how certain you are about your usage.
How do I calculate the break-even point for my usage?
Convert the annual standing charge saving into pence and divide by the unit rate increase (p/kWh). If your annual kWh is below that break-even figure, you’re more likely to benefit from the standing charge cut (all else equal).
Do standing charges apply if I use no energy?
Usually yes: standing charges are daily fees for being connected/supplied. If your meter is still active at the property, standing charges can accrue even with very low usage.
Can I avoid a standing charge entirely?
Some tariffs historically offered zero standing charge, but availability varies and the unit rate may be higher. Also, not all meter types or payment methods are eligible. Always compare based on estimated annual cost for your usage.
Is this calculator the same as the Ofgem price cap?
No. The Ofgem price cap sets limits on what suppliers can charge for default tariffs (with variations by region and payment method). This guide helps you estimate the impact of changing the balance between standing charges and unit rates, then compare market tariffs available to you.
Trust, methodology & sources
Page details
- Written by
- EnergyPlus Editorial Team
- Reviewed by
- Energy Specialist
- Last updated
- February 2026
How we assess savings (transparent approach)
- Per-fuel model: We treat electricity and gas separately because rates and standing charges differ.
- Inputs that drive results: annual kWh, standing charge (p/day), unit rate (p/kWh), region and payment method.
- Calculation: annual standing charge change minus annual unit-rate cost change (see formulas above).
- What we don’t assume: we don’t assume a guaranteed Ofgem outcome or a uniform supplier response across the market.
Limitations (important)
- Policy uncertainty: Any “2026” reform can be revised or delayed; suppliers may adjust pricing differently.
- Tariff complexity: multi-rate tariffs (Economy 7/time-of-use) need day/night splits to be accurate.
- Non-price factors: service, billing, and smart meter requirements can matter as much as small price differences.
Sources (UK)
- Ofgem (official regulator) — price cap, standing charge and consultation updates
- Citizens Advice: energy guidance — billing, switching and problem-solving
- GOV.UK — consumer rights and official services relevant to households
We link to primary sources where possible and update this guide when Ofgem publishes material changes.
Ready to check your best tariff for your postcode?
Get a whole-of-market comparison with key terms surfaced clearly (standing charge, unit rate, contract length, and any exit fees).
Back to Energy News