Ofgem launches review into standing charges on energy bills

As part of this work, the energy regulator will be asking charities, consumer groups, businesses, bill-payers and suppliers for their views on the charge, and for proposals on alternatives.  

Covered by the energy price cap, the standing charge is a daily charge that a consumer pays to their energy supplier each day, regardless of how much energy they use. The charge is used to recover the costs required to provide energy company services, including providing and maintaining wires, pipes and cables through to the staff and buildings required for the energy business to function.  

Ofgem’s director for markets Tim Jarvis said: “We know that standing charges have provoked a huge amount of debate in recent months and with wider cost of living pressures meaning customers will continue to struggle with bills, now is the right time to look at this again.  

“The standing charge is covered by the price cap, which puts a ceiling on what suppliers can set it. They’re also under no obligation to have a standing charge and can charge less than what is set out in the price cap.  

“However, it’s a complex issue and while an upfront set fee to cover a suppliers fixed costs works for some, it doesn’t work for others. Equally, spreading the costs differently might help some but our previous analysis has found it can also penalise some really vulnerable households.

“So, however we proceed, there is a difficult balance to be struck, which is why it is important as many as people as possible respond to our call for input with their experiences of it, how it affects them and what the alternatives to it could be.”