Energy: Standing Charges

Although standing charges are a commercial matter for suppliers, and are regulated by Ofgem, we know that too much of the burden of the bill is placed on them. The Government has worked constructively with the regulator on the issue of standing charges, and we are committed to lowering the cost of them.

The Government understands that there is a degree of variance in electricity standing charges across the country. This arises from a regional variation in electricity distribution costs and reflects the different costs of maintaining and upgrading the distribution network in a specific area, and the number of consumers those costs are spread across.

Ofgem’s recently published discussion paper sets out the options for how standing charges could be reduced, including by moving some supplier operational costs off standing charges onto the unit rate, increasing the variety of tariffs available for consumer in the market, and in the longer term, reviewing how system costs are allocated. Ofgem's publication can be found here: https://www.ofgem.gov.uk/call-for-input/standing-charges-domestic-retail-options. The Government will continue to support Ofgem in this work and ensure that standing charges are reduced.