Martin Lewis: Energy Standing Charges news – how disappointing!
Plans for all major energy suppliers to offer at least one low Standing Charge tariff to households by January 2026 have been confirmed by regulator Ofgem. But MoneySavingExpert.com founder Martin Lewis, who has long-campaigned for these fixed daily charges to be cut, says he's concerned that these proposals won't help those in most need.
Martin Lewis: 'There are some big problems with these plans'
Commenting on the consultation announcement, Martin said:
How disappointing! There was a chance to see a proper mandated low Standing Charge option to benefit many, and while I hope I'm wrong, it looks like Ofgem may be about to somewhat smother it with the pillow of bureaucracy.
I get more complaints about Standing Charges than anything else in energy bills. It's like a poll tax where people must pay £300+ a year just for the facility of having gas and electricity even if they don't use it. This moral hazard disincentivises people from cutting their usage, and punishes especially older people who only use their gas during the winter.
Having campaigned for years to get the Price Cap's Standing Charges lowered, once it became obvious that had failed, I proposed a dual Price Cap. One as it is, and another option with no or a low Standing Charge, and proposed that vulnerable users should be defaulted to whichever was best for them (lower users are the ones who benefit from no Standing Charges). Ofgem was warm to this at first, and agreed to ask for wide input on the basis of this idea.
Now, at the next stage of consultation, it seems to have substantially watered that down. While a low or no Standing Charge tariff option is an improvement, and will benefit some users, the core problem is it doesn't look like it'll be under the Price Cap mechanism. That leads to two big possible problems:
1) There is no limit to what firms can charge, so they could wipe the Standing Charge, but increase the unit rate far above what is needed to compensate for it.
2) Those most in need of this option – vulnerable low users – tend not to switch tariffs. While the Price Cap has unfortunately become a default price for many, the reason it was set up was as a backstop tariff for those who don't or can't engage in the market. Mandating a low Standing Charge switchers' tariff outside the Cap won't help them.
Add to that the fact it is proposing a minimum usage level to try and cut out second home owners, which could wrongly capture many very low users and overall I worry Ofgem has picked an easy route to appease suppliers' concerns, that doesn't help the most vulnerable.
I suspect if it goes ahead like this, not enough people will switch and they'll say "it wasn't worth it". We will robustly be pushing back in response in the consultation.
What Ofgem is proposing in more detail
Under the proposals in Ofgem's latest consultation:
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By January 2026, all major energy suppliers would have to offer at least one tariff with Standing Charges lower than those set by the Price Cap. How much lower will be decided by the consultation – but it could be the equivalent of £150 or £200 a year less. Under October's Price Cap, Standing Charges cost £320 a year on average; the new proposals would see this reduced to £170 or even £120 a year.
Ofgem has warned that distribution and other fixed costs cannot simply be removed from bills and have to be paid somehow. As a result, these costs are likely be shifted to the unit rates on any low Standing Charge tariffs – meaning higher users should probably avoid them. It's lower users – where Standing Charges make up a substantial portion of the bill – who could benefit and pay less. -
You'd need to have a minimum level of usage to qualify for these tariffs. Ofgem is proposing to set the thresholds at 666kWh for electricity and 2,836kWh for gas. That's around £178 per year of energy use (excluding Standing Charges). The intention behind this seems to be to cut out second home owners, yet, as Martin notes above, it risks wrongly capturing very low users.
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You'd have to proactively switch. Suppliers will be required to make the tariff available in all regions and to all customers, regardless of your meter type or payment method. However, as Martin points out, this won't help vulnerable low users who tend not to switch.
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Low Standing Charge tariffs would need to be "reasonably priced". It would be left to suppliers to work out what they deem reasonable. However, Ofgem says it may ask suppliers to show their methodology if rates look excessive.
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The new rules would end after two years. Ofgem says the new tariffs are likely to be a short-term solution while it conducts a wider investigation into how to allocate costs within the energy system. However, it'll still have the option to review and extend the rules if required.
What's been happening with Standing Charges
Standing Charges have increased significantly over the past two years and can vary hugely depending on where you live. Currently, only two suppliers offer 'no Standing Charge' tariffs: E Energy and Utilita.
In December 2024, Ofgem proposed requiring suppliers to offer a 'low or no Standing Charge' option, which would be controlled by the Energy Price Cap. The regulator began consulting on the details of this scheme earlier this year. However, in July 2025, Ofgem then announced that it was looking at whether suppliers should offer low or no Standing Charge tariffs that weren't part of the Price Cap.
Just days ago it was reported that the Chancellor Rachel Reeves was considering cutting Standing Charges as one potential option to reduce household energy bills. It followed a poll of over 60,000 people on Martin's social media channels where the main message was to "slash Standing Charges ahead of cutting energy VAT".
Under the Price Cap from 1 October, the average household paying by Direct Debit will pay 54p a day for electricity and 34p a day for gas – making up, on average, £320 a year of a typical energy bill. And for those who pay on receipt of bills, these costs are even higher.
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