Energy tariffs with lower standing charges coming from January

By January next year, you'll have a new energy tariff on the table - a deal that offers lower standing charges.

Let’s dig into what this means for you and whether you can use it to save on your energy bills.

What’s changing?

Ofgem, the energy regulator, has told every supplier in England, Scotland, and Wales to offer at least one tariff where:

• you pay less in daily standing charges (those daily fixed fees that tick away even when you barely use any energy)
• but… you’ll pay a bit more for each unit of energy you use

The idea is to give customers more choice and flexibility. It’s aimed at people who don’t use much gas or electricity but get stung by those daily charges.

Right now, people who pay by direct debit are charged around 53.68p per day for electricity and 34.03p per day for gas in standing charges alone. That might not sound like much, but it can add up quickly. If you use both gas and electricity, you could end up paying around £320 a year just in standing charges.

Will the new tariff actually lower your bills?

Whether the new tariff with lower standing changes lowers your energy bills will depend on what kind of energy user you are.

If you’re a low energy user, then yes, it could save you money as your standing charge would also be lower.

But if your usage goes up, you could end up paying more overall because the per-unit cost will also be higher.

What to do if you’re struggling to pay your energy bills

As the days get shorter and the nights grow colder, lots of people worry about keeping their homes warm. But if you’re struggling with energy bills, there are resources available to help.

Here’s a few options to consider:

• grants and hardship funds through your supplier – many energy companies and charities offer grants to clear energy debt or help with bills; it’s worth contacting your supplier to ask for details
• cold weather payments – paid out to people on certain benefits if the temperature drops below freezing for 7 days in a row
• warm home discount – automatic discounts of £150 off your electricity bill for households who qualify
• winter fuel payments – one-off payments for people on the state pension to help with heating costs during winter

These are just some options to consider, but the government website provides lots of other ideas, including insulation funds to make your home warmer.

The new lower standing charge tariff can also be an option to think about, but it’s really only worth exploring if your energy usage is particularly low.