Standing charges and regional variation

How standing charges work, why they vary and how to compare them with unit rates.

A standing charge is the daily price of keeping an electricity or gas supply available. It accrues even when the property uses no energy. The unit rate is the separate price for each kWh consumed.

For a single-rate tariff, the basic annual calculation is:

annual cost = (daily standing charge × days on the tariff) + (unit rate × energy used)

That is why a tariff with the lowest unit rate is not automatically the cheapest, and why a zero or low standing charge is not automatically a saving.

What the charge covers

The standing charge is not a payment made solely to the local network operator. Suppliers use it to recover a mixture of fixed or relatively fixed costs, including:

electricity transmission and distribution costs
meter and data services
supplier operating costs such as billing and customer service
policy and industry charges allocated to the fixed part of the bill
allowances arising from debt, supplier failure and other regulated costs

The allocation can change. A cost may move between the standing charge, unit rate and general taxation without disappearing from the energy system. This is why a comparison based on a breakdown from one price-cap period can age quickly.

Gas and electricity do not have identical cost allocations. Nor does a supplier have to reproduce the Ofgem cap’s exact split when designing a competitive fixed or time-of-use tariff, provided it complies with the rules that apply to that product.

The price cap is not one national tariff

Ofgem caps the unit rates and standing charges on domestic default tariffs. It does not cap the household’s total bill: using more energy still costs more.

The published national figures are averages. The actual cap depends on:

electricity region
payment method
whether the electricity tariff is single-rate or multi-rate
the relevant three-month cap period

Ofgem publishes the regional tables for direct debit, standard credit and prepayment. Use the table that matches the property rather than applying a national average to a quote.

For context, the Great Britain direct-debit averages for 1 July to 30 September 2026, current at the review on 22 July 2026, are:

Fuel	Average daily standing charge
Electricity	57.19p/day
Gas	29.04p/day

These are dated reference figures, include 5% VAT and will not remain current after that cap period. The linked Ofgem page is the source for live regional rates.

Why electricity charges vary by region

Domestic electricity pricing uses 14 regional areas inherited from the former electricity-board structure. The local distribution network, demand pattern and cost allocation differ between those areas.

Ofgem identifies four broad inputs to regional differences:

how many people live in the region
average regional energy use
how much energy suppliers need to buy
the cost of building and improving the network

A dense urban network can spread some fixed costs over many connections. A geographically large or reinforcement-heavy network may have a different cost base. The result is not a surcharge chosen by the household’s installer or the owner of its solar panels.

Gas charges also vary, but through their own regional and payment-method calculations. A property’s electricity region should not be assumed to determine an identical gas difference.

Low-use, solar and battery homes

Because the daily charge does not fall with consumption, it represents a larger share of the bill for a low-use property. This includes empty homes, very efficient homes and properties that meet much of their electricity demand from solar and a battery.

Solar generation and storage can reduce imported kWh. They do not normally remove the import MPAN, supply contract or standing charge. A summer bill can therefore consist largely of daily charges even when net imported electricity is small.

Export credit is separate. It may offset the account balance, but it does not cancel the standing charge calculation. Import and export also have separate MPANs and tariffs.

Removing an import meter or disconnecting a supply is a different decision from selecting a tariff. It can involve fees, landlord or network consent and later reconnection work. It is rarely a sensible response for an occupied property simply to avoid a standing charge.

Comparing low or zero standing-charge tariffs

A lower standing charge is normally paired with a higher unit rate. Compare the whole bill using the property’s expected consumption.

Suppose tariff A has the lower standing charge but the higher unit rate. Its annual break-even consumption against tariff B is:

365 × (standing charge B − standing charge A) ÷ (unit rate A − unit rate B)

Use standing charges in pounds per day and unit rates in pounds per kWh. Below the break-even point, A is cheaper; above it, B is cheaper. If the denominator is zero, the lower standing charge wins. If one tariff is cheaper on both components, no break-even calculation is needed.

For multi-rate tariffs, apply each unit rate to the kWh used in its own time band before adding the standing charge. An annual consumption total on its own is not enough.

Also check:

contract length and exit fee
whether both gas and electricity have the alternative charge structure
whether the quote is open to new and existing customers
payment method and meter eligibility
what happens at the end of the fixed term

The label “zero standing charge” describes how the supplier recovers its money, not an absence of network, metering or account costs.

Current lower-standing-charge pilot

Ofgem consulted in 2025 on requiring suppliers to offer lower-standing-charge tariffs. The earlier proposal was not implemented as a universal January 2026 requirement.

After considering the responses, Ofgem moved to a one-year pilot. Its current policy page says the pilot launch moved to June 2026 and identifies British Gas, EDF, E.ON and Octopus as participating suppliers. The pilot is intended to test take-up and outcomes before wider policy is decided.

That status is correct as at 22 July 2026. Availability, eligibility and rates are supplier-specific. A customer should not assume every supplier must already offer such a tariff.

The pilot sits alongside Ofgem’s wider Cost Allocation and Recovery review. The review considers how energy-system costs are shared, including the split between standing charges and unit rates. Until a final decision changes the market rules, it is safer to explain the current calculation than to predict a future abolition or redesign.

Payment method and meter type

Ofgem publishes separate capped rates for direct debit, standard credit and prepayment. The difference reflects the cost and regulatory treatment of serving those account types.

Economy 7 and other multi-rate default tariffs are capped across their rate structure rather than by copying the single-rate figures. A smart time-of-use or fixed tariff may sit outside the default-tariff cap in a different way. Always compare the tariff information supplied for the actual meter and payment method.

If an account changes from prepayment to credit, or between payment methods, both the unit rate and standing charge can change. Do not compare only one component.

Properties outside a normal domestic supply

A resident may pay energy costs through a landlord, heat network, communal system, park-home operator or building manager rather than hold a standard domestic supply contract. A displayed daily fee in that arrangement is not necessarily an Ofgem-capped domestic electricity standing charge.

Before comparing it with the regional cap, identify:

who holds the licensed gas or electricity supply contract
whether the resident is being resold energy
whether the charge relates to electricity, heat or building services
which consumer-protection and price rules apply

This avoids comparing unlike arrangements merely because both bills use the words “standing charge”.