New energy tariff with lower standing charges coming in January – but will it mean lower bills?

By the end of January, you’ll be offered a new energy deal with a lower standing charge, thanks to plans announced by Ofgem, the energy regulator.

The change means every energy supplier in England, Scotland and Wales will have to offer at least one tariff where you pay less in daily standing charges, but a bit more for each unit of energy you use.

Why is this happening?

Ofgem is responding to concern about the cost of energy bills, especially when you use comparatively little gas or electricity but still get hit with fixed daily charges.

The new plan is aimed at giving you more choice and control over how you pay.

Here’s what’s changing:

• By the end of January, you’ll be able to switch to a low standing charge tariff, no matter who your supplier is.
• All suppliers in England, Scotland and Wales must offer at least one of these tariffs.
• It doesn’t matter how you pay, whether it’s by direct debit, quarterly or on demand, you’ll still be able to choose the new option.

What are standing charges, anyway?

Standing charges are daily fixed fees that cover the cost of things like:

• delivering energy to your home
• maintaining the energy network
• ensuring energy supply is secure
• supporting certain bill support schemes

From 1 October, the charges will typically cost 53.68p a day for electricity and 34.03p a day for gas for those paying by direct debit.

But the actual amount can vary depending on where you live. For example, in North Wales and Merseyside, electricity standing charges can reach nearly 70p a day.

Will it really help lower your bills?

If you’re a low energy user, a lower standing charge could save you money. But there’s concern that you’ll pay more per unit of energy used, so your total bill could still be high if your usage increases.

Some charities and campaigners argue the plan doesn’t go far enough, saying it simply shifts costs around rather than making bills truly more affordable.

There's also concern that more tariff choices could leave you feeling more confused rather than empowered.

Need help now?

If you’re struggling with energy costs, there are ways you can get support:

• get emergency credit if you’re on a prepayment meter
• apply for a grant or hardship fund from your supplier
• join the Priority Services Register for extra support

To save on energy and reduce your bills, have a read of our 50 smart energy-saving tips.

Also, find out what happens when you have energy arrears and how to deal with the situation.

We can check you’re getting all the benefits you’re entitled to and help you create a realistic budget.