Government considers plans to remove daily standing charges from gas bills
The Prime Minister has asked ministers to investigate removing gas standing charges, a move that could shift costs to the unit rate and change how households pay for energy.
Key points
- The Prime Minister has requested a review into whether gas standing charges can be scrapped at the earliest opportunity.
- Removing the charge could benefit low-energy users, though some experts warn that vulnerable households with high usage could end up paying more.
- Costs currently covered by standing charges, such as infrastructure maintenance, would likely need to be recouped through higher unit rates.
Prime Minister Andy Burnham has asked the Chancellor and the Energy Secretary to examine the feasibility of removing daily standing charges from domestic gas bills. These fixed fees are charged to households regardless of how much energy they consume.
No formal plans have been confirmed yet, but the proposal is being considered ahead of the upcoming Budget. The government is looking at various ways to manage household energy costs as prices remain high.
How the charges currently work
Standing charges are fixed daily costs added to energy bills to cover the maintenance of pipes, cables, and the infrastructure required to deliver energy to homes. They also help fund support schemes for low-income households.
Under the current energy price cap, daily charges vary. The BBC reported these as 54.8p for electricity and 29.7p for gas, while This is Money stated average daily charges are 55.83p for electricity and 29.68p for gas.
Potential impact on household bills
One suggestion, supported by the research foundation Nesta, is to move these costs to the unit rate, meaning households would pay for the standing charge via the gas they use. While this may help those with low consumption, Citizens Advice has expressed concern that vulnerable individuals who rely on high energy usage could be financially penalised by this shift.
There is no immediate change to how households are billed. The government is currently reviewing whether this reform is a practical way to support those struggling with rising energy costs.
What it means for you
- Households do not need to take any action, as the government is currently only in the review stages of this potential policy.
- If the change proceeds, your bill structure may alter, with fixed daily fees disappearing and unit rates for gas potentially increasing.
- You can currently compare available energy tariffs online to see if switching to a fixed-rate deal could help manage your personal energy costs.
Where the reports differ: The sources provide slightly different figures for current average daily standing charges, with the BBC citing 54.8p for electricity and 29.7p for gas, while This is Money reports 55.83p and 29.68p respectively.
Sources
We compared these reports before writing and checked every figure, date and name in this story against them. Read them for the full detail.
- This is Money: Could gas standing charges be axed from energy bills? Burnham asks Chancellor to see if it's 'feasible' (21 Oct)
- BBC News: Burnham proposes plan to cut standing charges from gas bills (21 Oct)
Spotted a mistake? Email [email protected]. This story was written with AI from the reports above and checked against them; it is not financial advice.
