Hidden Costs of No Standing Charge Tariffs Explained

In the UK, there are now some energy suppliers who offer energy bills with zero standing charge tariffs. This means they say your energy bills will not have a fixed daily charge anymore. At first, it might sound like a good deal, especially if you do not use much energy or only need a little. You may feel glad that you do not have to pay a daily fee. But in recent years, people found that these zero standing charge tariffs are not always good for most homes. The reason is simple. The unit rates get higher. You pay more for every kilowatt hour (kWh) when you use energy. So, over time, the total cost can go up instead of down.

Knowing what the standing charge pays for, how it changes your bill with the energy price cap, and why taking it away can change the split between fixed and variable costs can help you see if it is a good option for your home.

What Is a Standing Charge and Why Does It Exist?

A standing charge is a fixed daily amount. You pay this to keep your home connected to the energy supply network. You pay this amount every day, even if you do not use any electricity or gas. This daily cost helps pay for things like keeping the network running for you and everyone else.

• The cost covers keeping up the network and paying for line rental for the gas and electricity cables.
• It also pays for meter reading and looking after billing.
• Part of the money goes to support government support schemes. These include things like the warm home discount scheme and extra help for vulnerable households.
• It helps pay for keeping the national grid and local power running for many years.

Every energy supplier has the right to set its own standing charge rate. But, these suppliers must not go over the limits set by the energy regulator Ofgem. The price cap means no energy supplier can ask for more than the allowed standing charge rate. This helps keep costs fair for people. The energy price cap is there to make sure that, whatever energy supplier you pick, you do not pay too much for your standing charge.

How Much Are Standing Charges Under the Current Price Cap?

From October to December 2025, Ofgem’s existing price cap sets a limit on how much suppliers can charge for each unit of energy and for each day.

This annual standing charge is there even if you use little energy at home. It helps keep the energy system going for all households.

Learn more about comparing fixed and variable tariffs

What Are No Standing Charge Tariffs?

No standing charge energy tariffs take away the daily fee from your bill. You pay just for the unit of energy you use. But to help cover their fixed costs, the suppliers will raise the unit rate. That means you end up paying more for every kWh of gas or electricity that you use.

Only about 3% of UK energy tariffs have no standing charge. This is true as of autumn 2025. Most of the time, these deals are from smaller energy companies or for people who use prepayment meters.

Why Do No Standing Charge Tariffs Seem Cheaper?

A zero standing charge tariff means there is no fixed daily charge. This can seem like a good choice for people who are away or do not use much energy. But for most houses, the yearly cost can be more. This is because the unit rates for a zero standing charge tariff are much higher than the rates found in capped tariffs.

If you use only 1 kWh each day, there is a good chance your yearly electricity bill will be about £15. But if you use 10 kWh in a day with the same rate, the bill could go up to £150 or even more. This is just for the electricity you use.

For a home where people do not use too much energy, no-standing-charge tariffs can cost you between £300 and £450 more every year. This is when you compare it to a standard capped tariff.

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Who Actually Benefits from a No Standing Charge Energy Tariff?

These plans work best for people who do not use a lot of electricity, like:

• Empty or second homes
• Holiday lets used for short periods
• Remote cottages with off-grid heating
• Garages or small storage units

For these properties, not paying the fixed daily charge can help people save around £100 to £200 each year. This is true if they use less than 500 kWh of electricity and 500 kWh of gas in a year.

But most homes use much more. On average, they get through about 2,700 kWh of electricity and 11,500 kWh of gas each year, based on Ofgem’s Typical Domestic Consumption Values.

Compare energy prices to see if a no standing charge tariff could work for you

The Hidden Costs of No Standing Charge Tariffs

Despite what they are called, these tariffs have some extra costs you may not know about. That makes them not as good for most homes.

• Higher unit rates – The price for electricity can be as much as 60p per kWh, and gas can be up to 18p per kWh. This is much more than you pay with normal rates that are capped.
• No benefit for normal users – A household that uses average or even a lot of energy will pay more. Any saving from not having a daily charge is quickly gone.
• Limited supplier choice – There are not many companies that have these deals. They also set strict rules on how much energy you use.
• No discounts for dual fuel – When you use both gas and electricity with these plans, you can’t get the savings you usually get with standard rates.
• Fewer payment options – A “no standing charge” deal is usually for prepayment users or those people who don’t use direct debit.

Example: How Usage Affects Your Bill

For people who do not use a lot of energy, they will not save money once they use more than about 500 kWh in a year.

What Ofgem Says About Standing Charges

The energy regulator Ofgem decides the limit for standing charges through the energy price cap. These charges help pay for the ongoing fixed costs of the energy network. This covers things like keeping the system running, safety checks, and energy connection work.

In January 2026, the energy supplier for your home must offer at least one deal with a low standing charge or no standing charge at all. But these deals will have higher unit rates. Because of that, most homes in the UK may not get much benefit from them.

How Standing Charges Affect Prepayment Customers

Customers who use prepayment meters usually have to pay higher standing charges and unit prices. This is more than what people who pay by direct debit have to pay. Most direct debit customers tend to get lower rates than those using prepayment meters.

Ofgem is trying to help by making changes and offering help through the Warm Home Discount Scheme. There is also help from other government support schemes.

Find the latest prepayment meter tariffs and compare energy deals

Why Standing Charges Are Rising in Recent Years

Standing charge energy tariffs cost more now. This is because they have added more non-energy costs to the price. Some of the things included now are:

• The Default Tariff Cap is used to cover problems with energy supplier failures.
• More money goes into fixing network issues and keeping things safe.
• Energy supplier admin and funds are set up to pay people when something goes wrong.
• Costs help with longer term solutions, like bringing in smart meters and making more renewable energy.

Even if energy prices go down, high standing charges keep the total bills high. This means your bills may not fall as much as you think, even when prices drop.

When Might a No Standing Charge Tariff Be a Good Option?

These tariffs may be a good option, but only in some cases.

• You have a home that stays empty for the most part over long periods.
• You may be out for much of the year.
• You use just a small amount of gas or electricity.
• You want to keep an energy connection but you use only a little.

Staying on a standard capped or fixed rate tariff is usually the cheapest way to go.

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How to Compare Energy Prices for Standing Charge Tariffs

When you use a price comparison tool, you should enter your real usage from your online account or your latest bill. Make sure you add the number in kilowatt hours. This helps the site figure out your total yearly cost. The site looks at unit rates and also daily charges to get this number right.

You can compare energy prices for standing charge tariffs, fixed rate tariffs, and variable rate deals. This will help you see which plan gives you the best value for your energy use. You will get your projected yearly bill. The site shows if a no standing charge plan may help you save money based on what you use.

FAQs About No Standing Charge Energy Tariffs