EDF Energy customers can save £676 on their energy bill per year after a daily charge has been scrapped.
Under new plans by energy regulator Ofgem, energy suppliers must offer households “zero standing charge” tariffs alongside existing ones.
The move comes as part of efforts to tackle growing household energy debt and will come alongside new standards for suppliers to make it easier for struggling customers to get support.
Under Ofgem’s price cap, standing charges have increased 43% since 2018 and from January 2025 will cost dual fuel households £338 on average per year. The charges disproportionately affect households that use less energy as the fixed costs make up a higher proportion of their overall bill.
But under Ofgem’s plans, suppliers must offer zero standing charge tariffs meaning EDF customers on a two year fix would save a whopping £676 if the charges were scrapped today.
Standing charges are a fixed daily amount that is added to your energy bill by suppliers, regardless of how much energy you use.
Currently, households on standard variable tariffs currently pay an average of 24.5p per unit with a standing charge of 60.99p per day, while for gas the average is 6.24p per unit with a standing charge of 31.66p per day.
From January 1, standing charges will drop slightly to 60.7p per day for electricity and 31.65p per day for gas, but some suppliers already offer low or no standing charge tariffs at all. But while these tariffs are at least 10% below the price cap they do have a higher unit rate, meaning they are more likely to benefit customers who use less energy.
Ofgem said tens of thousands of consumers have called for standing charges to be axed altogether, but those who use a lot of energy – often for medical and health reasons – would see their bills rise significantly, so it decided it was important for households to retain a choice of tariff.
Tim Jarvis, director general of 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.
“We want to give consumers the ability to make the choice that’s right for them without putting any one group of consumers at a disadvantage. And by having a zero standing charge tariff, we would create that choice for everyone.”
Ofgem also set out plans for a “debt guarantee” to improve the standard of service offered by suppliers supporting customers in debt, which it said would give households “consistent, compassionate and tailored support”.
Suppliers could also be required to accept debt repayment offers from reputable third parties such as debt advice agencies or consumer organisations.
Advice service National Debtline said energy debt is the second-most common debt among people it helps – behind credit cards – with the average amount owed in energy arrears increasing by 37% in the past year to £1,541.
The charity’s director of policy and advocacy, Peter Smith, said: “There is significant public concern around how high standing charges are. All major political parties made promises in their manifestos to reduce standing charges.
“Households that use prepayment meters are particularly impacted by the continuation of high standing charges. While several options to better protect prepayment meter households have been identified, Ofgem has opted to do nothing, leaving vulnerable households in often dire situations.”
