What Ofgem’s no-standing charge tariffs and debt support plans mean for your energy bills

Standing charges could be axed and a ‘debt guarantee’ introduced under new plans by the energy regulator Ofgem.

Let’s take a look at the proposed changes and how they’ll affect you.

Dual tariffs

Instead of households paying a fixed daily fee to stay connected to the grid, Ofgem suggests all energy suppliers offer two options for customers to choose from:

• a tariff with a capped price that includes the standing charge
• another where these costs are added to your energy usage charges

Dual tariffs like these are currently offered to some customers by a few energy providers.

They will still fall under the price cap, the highest price that firms can charge for each unit of energy and standing charges.

What are standing charges?

Currently, most households pay an average of 92p daily for standing charges, regardless of energy use. They’ve gone up by 43% since 2019.

If these fees were scrapped, a typical household could save over £330 a year.

Why the change?

Over 30,000 people told the energy regulator they want standing charges to be removed.

Those who use less energy said their bills didn’t change much even when they cut back on gas and electricity usage, so they’ll likely benefit from no-standing charge tariffs.

Individuals with prepayment meters or unoccupied properties could also notice a big difference in their bills.

Higher bills for some

Some people could face higher bills if these charges are added to the price of energy used, for example. those with disabilities who need to power special equipment.

This is why campaigners have called for energy providers to axe all standing charges rather than offer tariffs without them.

Money Saving Expert founder Martin Lewis says that doing this would mean higher energy unit prices, but it would force the government to put special support in place for vulnerable customers who use more energy.

The debt guarantee

Energy debt has soared to over £3.8bn, having nearly doubled in two years.

The Money Advice Trust says average arrears per customer have risen by 37% in the last year to £1,541.

To tackle this, Ofgem's also planning to offer a standardised support system to help those struggling to pay their bills.

Under these proposals, we could see:

• debt write-off schemes for eligible customers
• energy suppliers matching repayments
• providers accepting debt repayment plans from trusted third parties, like debt advice agencies or consumer groups

Next steps

Ofgem is consulting with providers and charities before making any changes in time for next winter.

The consultation is open until 6 February 2025 with a decision expected by May and further updates in July.

Struggling with energy bills?

If you're finding it hard to manage your energy costs, get in touch with your supplier.

Some firms offer grants to those who have fallen behind , or you could arrange a payment plan for what you owe.

If you’re in a vulnerable situation, see if you can join the priority services register for extra help.

Check out our guide on dealing with energy arrears for more information and our blog on where to go to get help with your energy bills.