Martin Lewis: Standing charges update risks households paying more
MoneySavingExpert.com founder Martin Lewis has warned that updated plans to require providers to offer low or no standing charge tariffs could risk some households paying more.
Martin has long called for standing charges to be cut, arguing that they unfairly penalise households on lower incomes and those looking to cut their usage. 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 the scheme this February.
However, as part of this process, Ofgem has now announced it is looking at whether suppliers should offer low or no standing tariffs that aren't part of the Price Cap, and so likely won't be price regulated.
Martin Lewis: These plans 'could potentially weaken' the 'low or no standing charge' Price Cap alternative
Commenting on the news on X, Martin said:
ENERGY STANDING CHARGE NEWS. I'm concerned that today [24 July 2025] Ofgem has put out plans that could potentially weaken the 'low or no standing charge' Price Cap alternative that was due to come this winter.
The proposal, which originally came from our MSE submission, was if you couldn't cut the main Price Cap standing charges (as would be preferred) instead have two Price Caps... one as now, and one with no standing charges, but higher unit rates.
That tariff would be better for those with LOW usage where the huge £300+ a year standing charges you pay just for the facility of having gas and electricity are a moral hazard.
Yet as you'll see [in Ofgem's proposal] it's now suggesting it mightn't do it within the Price Cap... It says "we are now also looking at whether to require suppliers to have available at all times, in all regions, at least one lower or zero standing charge offer".
I've two BIG potential concerns over this:
If it's not part of the Price Cap it likely won't be price regulated, so firms can charge what they like. In other words, they could choose to offer a no/low standing charge tariff but with hideously high unit rates defeating the purpose of getting it for almost everyone.
One of the keys to ensuring it is within the Price Cap is it would mean that vulnerable customers who are low users could be automatically defaulted to it. Outside the cap it would be a 'you must choose it' tariff.
Even though the Price Cap has sadly, since the energy crisis, become a de facto tariff for most people. That's not what it was designed to do. It was there to there to protect vulnerable users who never switched (eg, those with dementia) by ensuring they weren't being ripped off.
That's why this should be within the Price Cap mechanism, so those people can both be price protected and be shifted to the right low standing charge tariff by default.
My team and I will be responding strongly to the consultation on this to try and head this off, or work out how to add those protections within this scheme.
What Ofgem has proposed in more detail
The energy regulator has said that, following feedback from its initial consultation, it's now looking at alternatives to a Price-Capped low or no standing charge option.
The main alternative it's considering is requiring suppliers to offer, "at all times, in all regions, at least one lower or zero standing charge offer", which isn't under the Price Cap.
While a Price-Capped option is still being considered, these new plans mean the original intention to offer a low or no standing charge version of the Price Cap could be watered down.
Ofgem is expected to consult further on this in the autumn. It says it wants to see new low or zero standing charge tariffs being offered from January 2026.
How standing charges currently work
Standing charges are the daily cost you pay for the facility of having gas and electricity, even if you don't use any. The charges have increased significantly over the past two years and can vary hugely depending on where you live.
Under the Price Cap, the average household paying by Direct Debit currently pays 51p a day for electricity and 30p a day for gas – making up, on average, £296 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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