Why are energy standing charges so high since the Russian invasion of Ukraine?
The Russian invasion of Ukraine in 2022 resulted in a huge spike in energy prices which has settled down in recent years. Unfortunately, while unit prices have fallen, standing charges are at levels far higher than pre-2022.
What is a Standing Charge?
A standing charge is a fixed amount you pay to your energy supplier each day, regardless of how much gas or electricity you actually use. Think of it as a line rental for your energy supply.
According to Energy UK, standing charges cover:
- Network Costs (£95.20/year): Operating, maintaining, and expanding the gas pipes and electricity cables
- Operating Costs (£138.28/year): Running the supplier’s business (call centres, IT systems)
- Policy Costs (£24.96/year): Government environmental and social schemes
- Other Costs: Smart meter installation, supplier profit, debt coverage, and VAT
Why Have Standing Charges Risen?
Two main factors:
-
Regulatory Changes: Ofgem’s Targeted Charging Review (2022-23) shifted a large portion of network costs from per-unit energy rates directly onto the fixed standing charge.
-
Inflation: The electricity standing charge for 2024/25 was calculated based on the 9.2% inflation rate from December 2022.
This combination caused the average electricity standing charge to jump from 22p per day in October 2019 to 51p per day as of July 2025.
The Heart of the Controversy
Impact on Low-Energy Users: Because it’s a flat fee, it makes up a much higher proportion of bills for low-energy households. Even if you use no energy at all for weeks, you still pay the daily charge.
Discouraging Green Technology: High standing charges can discourage people from adopting electric vehicles.
Ofgem’s Proposal: A Zero Standing Charge Tariff
In early 2025, Ofgem consulted on requiring suppliers to offer a “zero standing charge” tariff—no daily fixed fee, but a higher price per unit. The costs don’t disappear; they’re simply moved from the standing charge to the unit rate.
The debate is ongoing. Ofgem is running trials from October 2025 to March 2026 and conducting a broader review of how to allocate energy costs more fairly.