Standing charges: domestic retail options
Considerations for moving operating costs from standing charges to unit rates
Summary
This section outlines the advantages and disadvantages of moving some of the supplier operating costs from standing charges to unit rates, including the trade-offs for both consumers and energy suppliers.
What we want to do
We want to look at the impacts of moving operating costs from standing charges to unit rates.
Details
One way to reduce standing charges within the energy price cap is to move part of energy supplier operating costs within the energy price cap from standing charges to unit rates.
Supplier operating costs currently form about £135 (40%) of annual standing charges (for people who get both gas and electricity from the same supplier). Our policy consultation in May 2024 outlines our initial consideration on the balance of costs on the standing charges against unit rate. Read more details in our operating costs review.
Moving all of the operating costs from the standing charge to the unit rate could have too harmful a financial impact on low-income, high energy usage consumers. It could also have potential impacts on energy supplier stability. Based on the current allowance of roughly £135, we consider that moving between £20 to £100 of operating costs from the standing charge to unit rates could be achieved.
Before you give us your views
You’ll need to read the details in the Considerations for moving operating costs from standing charges to unit rates chapter of the discussion paper (PDF, opens in separate tab).