Standing Charges Explained: Ofgem's Pilot and What It Means for Business

Ofgem has launched a pilot testing lower standing-charge tariffs. We explain how standing charges work for business energy, why a lower one is not always a better deal, and how to match your contract to your load.

Standing Charges Explained – The Standing Charge Debate – Standing charges, the fixed daily amount you pay before you have used a single unit, are one of the most complained-about parts of any energy bill. In June 2026 Ofgem launched a pilot to test lower-standing-charge tariffs. Here is what it involves and what it means if you run a business.

Standing Charges Explained – What the Pilot Is

From June 2026, Ofgem is running a one-year pilot with major suppliers, including EDF, E.ON Next, Octopus and British Gas, offering eligible customers a low or no standing charge tariff, with the cost recovered instead through a slightly higher unit rate. The aim is to see how customers and suppliers respond before deciding whether to roll the idea out more widely. You can follow the regulator’s position on its standing charges page.

The Domestic-Versus-Business Catch

The pilot is aimed at domestic customers, not businesses. But the underlying debate matters for business too, because the trade-off is exactly the same: a lower standing charge almost always means a higher unit rate, and whether that is a good deal depends entirely on how much energy you use.

Low-consumption sites, such as small offices, seasonal premises or units that sit empty for parts of the year, are hit hardest by standing charges and tend to benefit most from a lower one. High-consumption sites often do better with a low unit rate and are relatively unbothered by the standing charge, because the daily fixed cost is small relative to the volume of energy flowing through the meter. There is no universally better structure, only the one that fits your consumption profile.

What Drives Business Standing Charges

Business standing charges are not quite like domestic ones. Alongside the supplier’s fixed costs, they bundle in network capacity, metering and, for larger sites, availability charges linked to your agreed capacity (measured in kVA). That matters, because it means the fixed part of your bill can often be reduced more effectively by reviewing your agreed capacity and metering arrangements than by chasing a headline tariff.

Reviewing those elements is detailed work, and it is exactly where errors and overcharges hide. Understanding how the fixed and variable parts of your bill fit together is easier when you can see the whole picture, which is why we always start by helping clients read their business energy bill in full. Spotting capacity that is set too high, or charges that should not be there, is core to our energy bureau service.

How to Get the Structure Right

Because the standing charge and unit rate move in opposite directions, the right contract structure comes down to your load. Before you renew, it is worth understanding your annual consumption, how it is spread across the year, and how much of your current bill is fixed versus variable. Only then can you judge whether a lower standing charge would genuinely save you money or simply move the cost into your unit rate. That total-cost view is the same discipline we apply across all our energy procurement work.

The pilot is worth watching, but the practical win for business today is not waiting for a regulatory outcome. It is matching your contract structure to how you actually use energy, and making sure your capacity and metering are not quietly inflating the fixed part of your bill.

Standing Charges Explained – What This Means for Your Business

Standing charges are frustrating precisely because you pay them whether you use energy or not. Ofgem’s pilot may eventually give domestic customers more choice, and could influence the wider market. But for businesses the answer is available now: understand your load, review your capacity, and choose a contract structure that fits. Done well, that can cut the fixed part of your bill more than any headline tariff switch.

If you would like us to review your standing charges, agreed capacity and overall contract structure, our team can help. Get in touch to speak to one of our energy consultants today.

Further reading: VAT Scrapped on Electricity Bills from 1 October explains the temporary 0% VAT rate on electricity from 1 October 2026 and what it means for your bill.