Energy suppliers will be told by Ofgem to offer customers the option of paying no fixed-rate charges on their bills, reducing costs for households across the country.
All households currently pay a fixed daily charge that covers the costs of connecting to a supply – but there have been widespread calls for these fees to be scrapped.
Ofgem wants suppliers to offer a one price-capped tariff that includes the standing charge, and another that loads these costs on energy usage charges instead so that customers could choose which one suits them best.
Some suppliers already offer low-or no-standing charge tariffs but the regulator said the practice was not universal.
When Ofgem asked for the public’s views on standing charges it received an unprecedented response of 30,000 submissions.
The majority were against standing charges – fixed fees, typically totalling more than £300 a year, that are paid irrespective of how much energy households use.
Under Ofgem’s price cap, standing charges have risen by 43% since 2019.
Those with low energy usage, such as people who live alone, argued that even if they further reduced how much gas and electricity they used, they saw little difference in their bills. They wanted more control over their bills.
Customers would need to make a choice, but some campaigners want those with low energy use to automatically move onto a standing charge-free deal.
“The problem with presenting a choice of price caps is many vulnerable people won’t make that choice,” said Martin Lewis, founder of Money Saving Expert.
The planned overhaul for next winter, also raises the possibility of some unpaid bills that built up during a recent high-price crisis to be written off. This intervention comes at a time when households are struggling to clear what they owe with the level of debt and arrears reaching £3.8bn in September, up 91% in two years.
