UK’s Ofgem plans to mandate lower standing charges by January 2026

The Office of Gas and Electricity Markets (Ofgem), the energy regulator in the UK, has unveiled a plan requiring all major energy suppliers to introduce lower standing charge tariffs by January 2026.

Standing charges, which are fixed daily fees, cover costs such as energy transportation, supply security, network investment, and support for specific bill schemes.

However, these charges have been criticised as unfair since they are incurred regardless of energy usage.

According to a British Broadcasting Corporation (BBC) report, Ofgem has been reviewing the standing charge system for over a year, with an initial public consultation drawing significant feedback.

Under the proposed plan, suppliers in England, Scotland, and Wales will be required to offer at least one tariff with reduced standing charges. However, this may result in higher per-unit energy prices.

By the end of January 2026, all bill payers will have the option to switch to these tariffs, with availability for different billing methods such as direct debit and quarterly payments.

The plan will undergo further consultation before a final decision is reached.

The energy regulator clarified that standing charges cannot be eliminated and can only be redistributed within the bill, making it unlikely for overall energy costs to decrease.

Ofgem director general Tim Jarvis was quoted by the BBC as saying: “We have carefully considered how we can offer more choice on how they [consumers] pay these fixed costs, however we have taken care to ensure we don’t make some customers worse off.”

The announcement coincides with Ofgem’s decision to increase the energy price cap by 2% for the last quarter of this year. The change will result in the average UK household’s monthly energy bill rising by £2.93 ($3.94) for those on default tariffs.