Energy companies such as British Gas owner Centrica PLC (LSE:CNA) will need to offer tariffs without standing charges from next winter, under new plans from regulator Ofgem.
Standing charges, which are paid at a flat rate regardless of energy usage, have come under scrutiny recently after having risen by 43% since 2019.
These cover the cost of grid connections, such as phone line rentals and companies' other infrastructure bills, and are charged on a daily basis.
Ofgem’s proposal would see suppliers move to offering a price-capped tariff including standing charges, but also deals with the costs absorbed into usage-linked energy prices.
“Many people feel very strongly that standing charges are unfair,” Ofgem general markets director Tim Jarvis said.
“We want to give consumers the ability to make the choice that’s right for them without putting any one group of consumers at a disadvantage.”
A previous public consultation by Ofgem over standing charges fetched some 30,000 responses, with the fees typically over £300 a year for households.