Andy Burnham MP confirmed during Prime Minister’s Questions that he has asked the Chancellor and the Energy Secretary to explore whether standing charges could be removed from gas bills. In the same week, DESNZ released a call for evidence on the recovery of gas network costs during the transition, consulting on how to keep charges ‘fair and affordable’ for all. In this article, Brevia Energy examines why this has reached the top of the political agenda, the reform options being considered by Government and Ofgem, and what it might mean for the future allocation of energy system costs.
Background
The intervention reflects growing concern about the impact of standing charges on household energy prices, particularly for lower-income consumers. It also comes amid wider discussions about how the costs of maintaining and decarbonising the energy system should be recovered.
Standing charges are fixed daily costs levied on energy bills regardless of energy use. While often criticised by consumer groups, the Government and Ofgem have consistently argued that these cannot simply be removed. In a discussion with MoneySavingExpert founder Martin Lewis, Energy Secretary Miatta Fahnbulleh MP highlighted that standing charges cover unavoidable fixed costs, which includes funding network maintenance, metering, policy costs and supplier obligations.
Fahnbulleh nonetheless acknowledged concerns around the current approach. Ofgem’s consultation on standing charges attracted over 5,000 responses from individual consumers alone, underlining the political sensitivity of what is traditionally a highly technical aspect of energy billing. The Energy Secretary caveated that the challenge is deciding the fairest way of recovering these costs. Although moving these costs into unit rates could benefit lower-consuming households, it also risks increasing bills for vulnerable consumers who use more gas.
There are several options that the Chancellor and the Energy Secretary could consider and recommend to remove standing charges:
Shifting gas standing charge to the unit rate
Nesta has put forward a four-part proposal aimed at reducing the cost of electricity and strengthening incentives to electrify heat. In addition to abolishing the gas standing charge (and moving this to the flexible unit rate), the organisation argues that Government should go further by removing the remaining policy levies off electricity bills, ending the 5% VAT on domestic electricity, and write off historic electricity network debt through a one-off intervention. Combined, Nesta contends that these measures would help narrow the cost gap between electricity and gas, making technologies such as heat pumps more affordable to run, while supporting wider decarbonisation objectives.
Standing charge rebates to encourage off-peak use
Ofgem has been considering ways of enabling greater consumer choice in how fixed energy costs are recovered. This includes the potential introduction of lower or even zero standing charge tariffs, allowing consumers to opt for higher unit rates in exchange for lower fixed charges. This would primarily benefit lower-usage households, but could also increase bills for larger households and vulnerable consumers with higher energy needs. As a result, Ofgem has increasingly focused on providing a range of tariff options, rather than abolishing standing charges outright, reflecting the broader challenge of balancing affordability, fairness and cost recovery across the energy system. Ofgem’s large-scale trials, published on 1 October 2026, found that standing charge rebates designed to encourage off-peak electricity use gave participants a greater sense of control and reduced negative perceptions of standing charges.
Dual-price-cap model
Martin Lewis has advocated for a dual-price-cap model, allowing consumers to choose between lower standing charges and higher unit rates, or vice versa.
However, as shown in supplier switching there are challenges in encouraging different groups to engage with energy tariffs and to make choices in their financial interest. This is particularly true of vulnerable consumers. Martin Lewis’ solution to this is that these groups should be automatically placed on the most beneficial option.
Beyond standing charges
These developments reflect a broader debate over how energy system, network and policy costs should be shared. As Treasury balances affordability, energy investment, and net zero ambitions, attention is shifting from standing charges themselves to who ultimately pays for the energy transition. Under tight fiscal constraints, abolishing the gas standing charge (£0 cost to Government) may prove more attractive to Government. In the meantime, Government has now demonstrated a willingness to engage with and explore proposals that help manage competing priorities in a constrained budgetary environment. Businesses seeking to engage should be cognisant of how these pressures can be navigated and proposed solutions implemented.
