Ofgem is proposing introducing zero standing charge tariffs or mandating energy suppliers to offer low standing charges.

The regulator will consult on introducing an option under the price cap to include zero standing charge tariffs alongside existing tariffs. Ofgem is proposing suppliers offer one price-capped tariff including the standing charge or one that loads costs on the energy usage with consumers choosing the option best suited to their needs.

The regulator has also set out its debt strategy, which aims to tackle the growing impacts of rising debt in the energy system, and to create lasting change in the way debt is managed and customers in debt are supported.

Tim Jarvis, director general markets at Ofgem, said: “We know that many households continue to struggle with bills after the events of the energy crisis, which is why earlier this year, we took steps to consider all the issues around affordability and debt – including the impact of the standing charge. Many people feel very strongly that standing charges are unfair and prevent them from being able to manage their bills effectively.”

The proposals put forward by the regulator follow a paper published in August which set out a number of short-term options to reduce the standing charge, which covers the fixed costs for the provision of energy that everyone has to pay. The proposals were outlined in two consultations, Resetting the energy debt landscape: the case for a debt relief scheme and Improving debt standards in the domestic retail market. Both consultations will close on Thursday 6 February 2025, and the regulator will accept joint responses covering both documents

Ofgem will publish a consultation on the standing charges proposals in the new year.

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