British Gas, E.ON, EDF, and OVO customers to save up to £388 per year after new rules axed standing charges on household energy bills

In a groundbreaking move, energy regulator Ofgem has announced that major suppliers, including British Gas, E.ON, EDF, and OVO, must offer household tariffs free of standing charges. The shift is part of Ofgem’s broader effort to tackle growing energy debt, offering relief to millions of UK consumers.

Standing charges are fixed daily fees that energy suppliers have added to bills, regardless of the amount of energy used. Over the past five years, these charges have skyrocketed by 43%. According to Ofgem’s latest figures, from January 2025, the average standing charge for dual-fuel households will amount to £338 per year. But the new regulations will allow consumers to choose zero-standing charge tariffs, potentially saving households up to £388 annually.

For years, standing charges have sparked frustration among consumers, particularly those who use less energy. Many have argued that the fees, which can add up even in months of low usage, are unfair and unaffordable. In response, Ofgem has acted decisively, pushing for suppliers to offer more flexible and affordable tariff options.

Under the new rules, suppliers must offer both zero-standing charge tariffs and existing plans, giving consumers a choice. The move comes after numerous complaints from customers struggling to manage their bills, many of whom pointed to the standing charge as a major obstacle. Some households, especially those with high energy needs due to medical conditions, are likely to be affected by the change. However, the introduction of zero-standing charge tariffs should help ease the burden for millions of others, who can now select a plan more suited to their energy consumption habits.

Tim Jarvis, Director General of Markets at Ofgem, stated that the regulator recognises the financial pressures households continue to face in the aftermath of the energy crisis. He added that the new initiative would allow consumers to make better-informed decisions about their energy usage without putting any particular group at a disadvantage.

This announcement is part of a wider response to the surge in energy bills over the last few years, which has left many families in financial difficulty. In addition to the removal of standing charges, Ofgem has introduced several other measures to help manage energy costs, including improved price cap mechanisms and more transparent billing systems.

But while these changes are expected to deliver savings for many households, the impact on higher-energy users remains unclear. These consumers, often with health-related needs requiring more power, may see an increase in their overall bills due to higher unit rates associated with zero-standing charge tariffs. Ofgem has acknowledged this concern and stressed that providing a range of tariff options is essential for ensuring fairness across the board.

The decision comes at a time when the energy market remains under intense scrutiny. Rising energy costs have sparked debates over the fairness of the system, with some critics accusing energy companies of profiteering. This latest move by Ofgem, however, signals a shift towards a more consumer-friendly approach.

Currently, dual-fuel households on standard variable tariffs pay 24.5p per unit for electricity, with a daily standing charge of 60.99p. For gas, the charges are 6.24p per unit and 31.66p per day. Scrapping standing charges will help mitigate these costs, providing financial relief for many.

The reform also includes a reduction in the price cap on standing charges, which will drop slightly from 61p per day for electricity and 31.65p for gas in January. Though some suppliers already offer lower-standing charge tariffs, these are often accompanied by higher unit rates, which may not suit all households.

Ofgem’s latest changes are expected to significantly impact how consumers manage their energy usage and bills. While the reform brings good news for many, it is clear that ongoing adjustments are necessary to ensure a fair and sustainable energy market for all.