Standing charges explained
The standing charge is the part of your energy bill that annoys people most. It’s a daily fee you pay for being connected to the grid, regardless of whether you use a single watt of energy. Go on holiday for a fortnight and your standing charge keeps ticking. Use nothing at all and you still owe it.
What it actually covers
The standing charge pays for the infrastructure that delivers energy to your home. The wires in the street, the local substation, the gas pipes under the road, the meter on your wall, the distribution network that connects everything together. Someone has to maintain all of that, and the standing charge is how it gets funded.
It also covers some of the cost of government social and environmental schemes, such as the ECO insulation programme and the smart meter rollout. Until recently, the Warm Home Discount (a £150 annual rebate for eligible low-income households) was also funded through standing charges. From April 2026, that cost is moving into unit rates instead, which is one reason standing charges are expected to fall slightly.
How much is it?
Under the Q1 2026 price cap (January to March), average electricity standing charges are around 54.75p per day and gas around 35.1p per day. That works out to roughly £200 per year for electricity and £128 for gas, before you’ve used a single unit of energy.
These figures change when Ofgem updates the price cap, which happens quarterly. From April 2026, standing charges are expected to drop by around £39 per year for a typical dual fuel household, because the cost of funding the Warm Home Discount scheme is being shifted from standing charges into unit rates. That’s a meaningful change, especially for low-usage households who felt the fixed daily charge most keenly.
Why it varies by region
The UK has 14 electricity distribution regions, each operated by a different Distribution Network Operator (DNO). These companies maintain the local grid infrastructure, and their costs differ. A region with older infrastructure that needs more maintenance will have higher distribution charges. A rural region with long cable runs serving fewer properties costs more per connection than a dense urban area.
The result: standing charges can differ noticeably between the cheapest and most expensive electricity regions. Over a year, that gap can add up to £35-55. You can’t do anything about this. Your region is determined by your address. We have a full breakdown in our regional pricing guide.
Gas standing charges also vary, though by a smaller amount. There are 13 Local Distribution Zones for gas, each with their own cost structure.
The argument against standing charges
Many people, Octopus included, think standing charges are too high. Their argument: a large fixed daily charge hits low-usage households hardest. A pensioner in a small flat who uses very little energy still pays the same standing charge as a family of five in a four-bedroom house. That feels unfair.
Octopus has publicly advocated for a model where more of the cost is shifted onto unit rates and the standing charge is reduced or even abolished. Under that model, people who use less energy would pay less overall, which would also create a stronger incentive to reduce consumption.
There are signs of progress. Ofgem has confirmed plans to require all suppliers to offer at least one tariff with a lower standing charge, though the timetable has slipped. The January 2026 deadline was missed, and as of early 2026 these tariffs have not yet appeared. The idea is that customers could choose a tariff with a substantially reduced standing charge (potentially £150 or more per year lower) in exchange for higher unit rates. Whether that saves you money depends entirely on how much energy you use.
The counter-argument
Others argue that everyone who is connected to the grid benefits from the grid, so everyone should contribute equally to its upkeep. If you abolished standing charges entirely and loaded everything onto unit rates, people with solar panels and batteries who barely import from the grid would contribute almost nothing to maintaining the infrastructure they’re still connected to and still rely on as backup.
There’s also a practical concern: removing standing charges would significantly increase unit rates, which would make bills less predictable. A cold snap could suddenly create a much larger bill than expected.
Standing charges on your bill
On your Octopus bill, you’ll see the standing charge listed separately for each fuel. It shows the daily rate and the number of days in the billing period, giving a simple multiplication.
For electricity: something like 54.75p/day x 31 days = £16.97
For gas: something like 35.10p/day x 31 days = £10.88
VAT at 5% is then applied on top of these charges along with your usage charges.
Can you avoid standing charges?
Not easily. Every major supplier includes them on standard tariffs, and the Ofgem price cap sets the maximum level. Some smaller suppliers have experimented with zero standing charge tariffs, but they compensate with higher unit rates. Whether that works out cheaper depends entirely on your usage level.
Octopus doesn’t currently offer a zero standing charge domestic tariff (though they do offer one for business customers). Ofgem’s planned requirement for suppliers to offer at least one lower standing charge option has been delayed, so the landscape may shift later in 2026. For now, Octopus domestic tariffs all include a standing charge at or close to the Ofgem cap level.
One per fuel, not one per home
A point that sometimes catches people out: you pay one standing charge for electricity and a separate one for gas. If you only have electricity (no gas connection), you only pay the electricity standing charge. Homes that have converted fully to electric heating and hot water avoid the gas standing charge entirely, which saves roughly £128 a year at current rates.
This is one of the smaller financial arguments in favour of heat pumps and electric water heating. It won’t justify the installation cost on its own, but it’s a factor worth knowing about.