British Gas customers being handed free £388 after daily charge scrapped

British Gas customers could save an average of £388 annually following Ofgem's new rule change on standing charges. The energy regulator has announced that suppliers must offer "zero standing charge" tariffs by next winter, alongside their existing rates.

Standing charges, which are fixed daily fees added to energy bills regardless of usage, have risen by 43 per cent since 2019 under Ofgem's price cap. Martin Lewis, the money saving expert criticised standing charges as "a £338-a-year poll tax on energy bills" that discourages lower users from reducing their consumption.

A standing charge is a fixed daily amount that you pay on your bill regardless of how much energy you use. Standing charges apply to both gas and electricity and will vary by supplier, where you live, how you pay and what meter you have.

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It is a a fixed daily charge you pay in addition to the unit rate regardless of how much gas or electricity you use to cover the cost of being connected to the energy network. Like line rental for energy. Ofgem’s reason for having separate standing charges is to distribute the amounts evenly across all of us.

If the costs that make up the standing charges were added to gas and electricity unit rates, it could lead to vulnerable households paying proportionately higher energy costs. On its website, British Gas says standing charges cover the suppliers cost of maintaining the energy supply network that delivers gas and electricity to your home and visiting homes to take meter readings.

It also covers supporting government social and environmental schemes like the Warm Home Discount and failed suppliers exiting the energy market – electricity only. Standing charges apply to both gas and electricity and will vary by supplier, where you live, how you pay and what meter you have.

Generally, homes in more rural locations - where the gas or electricity supply has to travel further from where it’s generated - have higher standing charges.