Energy experts have broadly welcomed the removal of standing charges from gas bills as a “progressive” step, but warned it is unlikely to ease high costs this winter.
Cornwall Insight, which provides widely respected energy price forecasts, said the savings would be “small” compared with recent bill rises, though the change could also give the transition to heat pumps a boost.
What the change means for households
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “Scrapping the gas standing charge from as early as 2027 is a broadly progressive move that may help lower-income households who tend to use less energy.”
He added: “Given the timeline, it is unlikely to ease the high costs this winter, and the savings will be small compared with recent bill rises, but with the cost of living still hitting budgets, any reduction will be welcome when it comes.”
Lowrey noted that moving more of the cost onto each unit of gas could make heat pumps a more attractive option against a gas boiler for higher-use households.
Trade-offs and vulnerable households
However, he warned of trade-offs, as the money still has to be recovered. Higher unit rates mean people in badly insulated homes, larger families, or those who need heating on for health conditions could end up paying more.
“Some of them are the same vulnerable households this policy is meant to help, so making sure that they see the intended benefits of this change will be essential,” he said.
Dhara Vyas, chief executive of Energy UK, which represents firms, also welcomed the move as “good news” for many customers but stressed the importance of supporting low-income households who could otherwise lose out.
She said: “Our latest report with Mitsubishi Electric on reducing the price of electricity relative to gas – also known as the spark gap – to accelerate electrification recommended moving the gas standing charge onto the unit rate from April 2028, and stressed that the change needed to be accompanied by a social discount scheme to protect low-income households who have no choice but to use a lot of gas.”
Implementation and consumer impact
Vyas said standing charges cover the fixed infrastructure and operational costs required to keep homes connected to the energy system, regardless of consumption. These costs need to be recovered elsewhere, and as any change will create winners and losers, it needs to be introduced carefully.
“So it is critical the Government and Ofgem work closely with industry and consumer groups on implementation to avoid negative consequences,” she added.
Richard Neudegg, director of regulation at Uswitch.com, called the move a “sensible idea for the longer term.” He said paying a daily gas standing charge can grate for households that use very little gas and can feel illogical over summer or when heating is off.
Neudegg said households using less gas, such as those in smaller homes, should benefit, as should those who have switched to electric heating but kept a gas connection. However, he noted costs will move into the price of each unit of gas, meaning heavy users could be worse off.
Based on current rates, a household using 7,000 kWh of gas a year could be about £40 better off, while a home using 14,000 kWh could be £25 worse off. A household using the typical 11,500 kWh shouldn’t see any change.
“The Treasury says these changes will happen ‘in 2027 or as soon as possible after’. In the meantime, consumers face a difficult winter with further price cap increases on the horizon,” he said.
