Standing charges: what you pay before using a single unit of energy

Every household on a standard energy tariff in England, Scotland and Wales pays a fixed daily fee before a single kilowatt-hour reaches the kettle. That fee is the standing charge, and from 1 October it adds up to 84.5 pence a day for a home taking both gas and electricity — roughly £308 over a full year, whether you are in all winter or away for three months.

With the new price cap taking effect on 1 October, the standing charge is the part of the bill readers ask about most, and the part suppliers explain least. Here is what it actually covers, how much of your bill it represents, and when the newer low standing charge deals are worth a look.

What changes on 1 October

Ofgem confirmed on 26 August that the cap would rise by 4% for the quarter running from 1 October to 31 December. A typical household paying by direct debit for both fuels will face about £1,723 a year if those rates were held for twelve months — an increase of roughly £60 a year, or £5 a month.

One figure causes constant confusion. You may also see £1,935 quoted for exactly the same cap. The difference is not a different tariff: Ofgem cut its assumed typical household consumption on 1 July, so the higher number simply expresses the same cap on the old usage basis, which makes comparisons with earlier quarters possible. Neither figure is a maximum bill. The cap limits unit rates and standing charges, not the total you pay — use more, pay more.

Note too that the cap does not reach Northern Ireland, where energy prices are overseen by a separate regulator and set on a different timetable.

What the daily fee actually buys

Split by fuel, the average cap-level standing charges for the October to December quarter are 54.8p a day for electricity and 29.7p a day for gas. They cover the costs of keeping you connected rather than the energy itself: maintaining the pipes and wires, meter reading and meter maintenance, government schemes, and the cost of taking on customers from suppliers that have gone bust.

Some perspective helps. Standing charges make up around 18% of a typical dual-fuel bill, down from a peak of about 24% in the third quarter of 2024. They have fallen as a share of the bill even as the headline figure has risen — which is not how most households experience them, because the daily fee is the bit that keeps ticking when you cut back.

That asymmetry explains a familiar frustration. Turning the thermostat down, drying clothes on a rack rather than in a machine, or replacing a tired fridge with a model built to last — the sort of choice made easier by the durability labelling now being extended to more appliances — reduces the unit-rate half of the bill only. The standing charge does not move.

Low standing charge tariffs: who they suit

Since the start of this year, suppliers have been required to offer at least one lower standing charge tariff in every region, to smart meter and traditional meter customers alike. Ofgem has also run a limited pilot with several large suppliers, and is consulting on whether a zero standing charge option could sit under the cap, with the fixed costs moved into unit rates instead.

The trade-off is the whole story. A lower daily fee almost always means a higher price per unit, so the arithmetic favours low-usage households: a flat occupied by one person, a second home, a property empty for much of the year. Run an electric vehicle, a heat pump or a busy family home and the sums usually flip the other way, because you will pay the higher unit rate on a great deal of energy.

Three checks before switching:

• Find your real annual usage in kWh, not your monthly payment. It is printed on your annual statement and visible in your online account.
• Multiply that usage by the new unit rate, then add the daily fee times 365. Do the same for the tariff you are considering, and compare the two totals rather than the headlines.
• Check the exit fees and the end date. A deal that suits a quiet spring may look very different if your circumstances change in January.

Households weighing up solar as a way of shrinking the unit-rate side of the bill should be equally clear-eyed: the technology is advancing quickly, as the spread of floating solar installations shows, but generating at home offsets units consumed, never the connection fee.

What happens next

The cap is reset every three months, and the next level applies from 1 January. Analysts quoted widely in mid-September forecast a further substantial rise, with one Bloomberg analysis pointing to an increase of around 25% driven by wholesale gas prices. These are forecasts, not decisions: Ofgem sets the figure, and the announcement is due in late November.

Two practical steps carry no risk. Submit a meter reading close to 1 October so that usage before and after the change is billed at the right rate — a habit worth keeping whenever a tariff or a tenancy changes, as anyone who has dealt with an energy assessment when moving home will recognise. And if you are struggling, contact your supplier before arrears build: they are obliged to discuss a payment plan, and the help available in winter is far easier to arrange in October than in February.

Frequently asked questions

Can I avoid the standing charge altogether?

Not on most standard tariffs. A small number of zero standing charge deals exist, and Ofgem is consulting on making the option available under the price cap, but they recover the same fixed costs through a higher price per unit. You avoid the daily fee, not the cost.

Does the price cap mean my bill cannot go above £1,723?

No. That figure describes a household with typical usage. The cap limits the rates your supplier may charge, so a home using more than the typical amount will pay more than £1,723 over a year.

Do I pay a standing charge while a property is empty?

Yes, as long as the supply is connected and the account is open. That is why low standing charge tariffs tend to suit second homes and properties left empty for long stretches.

Sources

• Ofgem — Energy price cap will rise by 4% from October 2026
• House of Commons Library — Energy standing charges
• Ofgem — Plans to introduce lower standing charge tariffs

This article was written with the help of artificial intelligence. Editorial policy