Lower Standing Charge Tariffs: Are They Worth It?

What is a lower standing charge tariff?

An electricity bill normally has two main tariff charges: a unit rate for every kWh used and a standing charge for each day the supply is available. You pay the standing charge even on a day when you use no electricity. A lower standing charge tariff shifts more of the cost away from that daily fee, usually by increasing the unit rate.

That trade-off matters. A household using little electricity has fewer expensive units to pay for and may keep more of the standing charge saving. A high-use household can lose the saving through the higher unit rate. Ofgem explicitly warns that its pilot tariffs might not be cheaper than other available deals.

The price cap does not cap your final bill. For standard variable tariffs in Great Britain, it limits the combined unit rate and standing charge calculation for a typical level of use. The amount you actually pay still depends on your consumption, region, payment method, meter and tariff.

How the 2026 Ofgem pilot works

Ofgem launched a one-year lower standing charge tariff pilot in June 2026. It initially named EDF, E.ON, Octopus and British Gas as participating suppliers, while encouraging others to take part. Places are limited and each supplier controls its own terms, prices and eligibility criteria, so there is no single national pilot tariff you can request from any company.

Ofgem says a dual-fuel customer in the pilot could pay about £150 less per year in standing charges than on the price cap, with the reduction split between electricity and gas. Electricity-only customers may therefore receive less than the full amount. Suppliers are expected to set higher unit rates, which means the headline standing charge reduction is not the same as a £150 bill saving.

One concrete offer shows how supplier rules differ. EDF said eligible customers in its FreePhase trial would receive a £6.25 monthly standing charge discount for each fuel, with no exit fee. Do not assume another supplier will use the same discount, eligibility rules or tariff design; check the current tariff information before agreeing.

• Ask whether the offer is electricity-only or dual fuel.
• Write down the unit rate, daily standing charge, contract length and exit fee.
• Check whether a smart meter, payment method or minimum or maximum usage rule applies.
• Ask what happens when the pilot or fixed term ends.

Who is most likely to save?

Lower standing charge tariffs are most promising for genuinely low-use homes, such as a small efficient flat, a property occupied only part of the year or a home with solar panels that imports relatively little electricity. Even then, standing charges continue every day while the property remains connected, and export payments from solar panels should be assessed separately.

They are less likely to work for homes with electric heating, storage heaters, heat pumps or frequent electric-vehicle charging unless the unit-rate increase is very small. Medical equipment and other essential electricity use can also make a higher unit rate particularly costly. Do not reduce necessary heating or essential use simply to fit a tariff.

Use at least 12 months of bills or smart-meter data where possible. A short summer period can make an electrically heated home look artificially low-use. Compare like with like: the same annual kWh, region, payment method and tax basis for every tariff.

Calculate the break-even electricity use

First calculate the annual standing charge saving: subtract the lower daily charge from the alternative daily charge, then multiply by 365. Next calculate the extra unit cost by subtracting the alternative unit rate from the lower-standing-charge tariff's unit rate. Divide the annual standing charge saving by the extra cost per kWh. The result is the break-even annual consumption.

For an illustrative comparison, suppose Tariff A charges 55p a day and 26p per kWh, while Tariff B charges 35p a day and 29p per kWh. Tariff B saves 20p a day, or £73 a year, but costs 3p more per kWh. The break-even point is £73 divided by £0.03, which is about 2,433 kWh a year.

At 1,800 kWh a year, Tariff A costs £668.75 and Tariff B costs £649.75, so Tariff B is £19 cheaper. At 3,500 kWh, Tariff A costs £1,110.75 and Tariff B costs £1,142.75, so Tariff B is £32 more expensive. These rates are examples only, but the method works with any two single-rate tariffs.

A five-step tariff comparison

Start with the tariff labels or quotations, not an advertised saving. Suppliers can structure offers differently, and a low standing charge can sit alongside a fixed, variable or time-of-use unit rate. If rates vary by time, calculate each usage period separately instead of using the simple single-rate break-even formula.

Then test more than one consumption scenario. Your previous 12-month use is the best starting point, but also check a higher-use case if you expect an electric vehicle, heat pump, new appliance or more time at home. A small change around the break-even point can reverse which tariff is cheaper.

• Find annual electricity use in kWh on a bill or supplier account.
• Calculate unit cost: annual kWh × unit rate.
• Calculate fixed cost: daily standing charge × 365.
• Add unit cost, fixed cost and any unavoidable fees; subtract guaranteed discounts.
• Repeat for every tariff using exactly the same consumption.

Checks before you switch

Check whether the rate is fixed or variable and whether the Ofgem price cap applies. A fixed tariff can charge exit fees if you leave early. A variable tariff can change, so the current break-even point may not remain the same. Also confirm whether quoted prices include tax and whether a discount depends on Direct Debit, paperless billing or a smart meter.

Look beyond the pilot. Compare the offer with other available tariffs, including deals with an ordinary standing charge but a lower unit rate. Citizens Advice recommends comparing suppliers when trying to reduce a standing charge, because the amount varies with tariff and region.

Keep the tariff quote or information label and take a meter reading on the switch date. Check the first bill against the agreed rates. If affordability is the reason you are considering the tariff, tell your supplier: it must discuss support options, and a cheaper-looking tariff is not a substitute for help with energy debt.

Does the pilot apply in Northern Ireland?

No. Ofgem regulates energy markets in England, Scotland and Wales, and its lower standing charge pilot applies across Great Britain. Northern Ireland has a separate electricity market, suppliers and regulatory arrangements.

Northern Ireland customers can still encounter tariffs with low or zero standing charges, but these are not part of the Ofgem pilot. Use the Consumer Council's electricity comparison table, which lists unit rates, standing charges and estimated annual costs for available Northern Ireland tariffs, and compare the complete cost for your own use.