By Clare Yates
2 min read
Energy standing charges are set to fall next month after the government confirmed a change in the way suppliers recover certain costs from customers.
From 1 April, energy companies will move the cost of the Warm Home Discount scheme away from the daily standing charge. Instead, it will be included within the electricity unit rate. This means the fixed daily charge on electricity bills will drop by around £39 a year for households.
The change does not necessarily mean everyone will pay less overall, though. Because the cost is being moved to the price per unit of electricity used, households with average energy use may find the saving on the standing charge is largely balanced out by slightly higher usage costs.
Those who use less electricity are more likely to benefit. With a lower standing charge to pay each day, households with lower consumption will mainly be paying for the energy they actually use.
Why are changes being made to standing charges?
The move is part of wider efforts by the government to address concerns about standing charges, which many households feel are too high. Standing charges are the fixed daily cost added to energy bills to cover things like maintaining the energy network and metering services. There has long been concern that customers pay them even if they use no energy.
Under the current price cap set by Ofgem, the typical electricity standing charge is about 55p per day, while gas averages around 35p a day. That adds up to roughly £328 a year.
Money saving expert Martin Lewis described the change as a positive step, although he said it’s only a small improvement. He said the move suggests regulators are starting to respond to growing frustration about standing charges, which generate more complaints than any other energy bill issue.
The change comes alongside other government plans to lower energy costs. In last year’s Budget, Chancellor Rachel Reeves announced measures intended to reduce household energy bills by around £150 a year.
According to the Department for Energy Security and Net Zero, the changes could bring larger savings for some homes. For example, a household with high electricity use for heating could save around £395 on their energy bills over the coming year when both policies are combined.
