Lower Standing Charge Gas Tariffs: Are They Cheaper?

The short answer: lower fixed cost can mean a higher unit price

A lower standing charge gas tariff can be cheaper for a low-use home, but it is not automatically a better deal. Ofgem says suppliers taking part in its Great Britain pilot are expected to set higher unit rates on these tariffs. The saving on the daily charge can therefore be cancelled out when you use more gas.

Compare the full annual cost using your own gas consumption: (unit rate × annual kWh) + (daily standing charge × 365). Include any exit fee, discount or other fixed charge shown in the offer. Use prices that include VAT, or treat VAT consistently on both tariffs.

This guide covers domestic tariffs in England, Scotland and Wales. Ofgem’s price cap and its lower-standing-charge pilot do not apply in Northern Ireland, where the Utility Regulator oversees a separate market.

What is the lower standing charge tariff pilot?

Ofgem launched a one-year pilot from June 2026 after deciding not to proceed immediately with a rule requiring every supplier to offer a lower-standing-charge tariff. It said eligible customers of EDF, E.ON, Octopus and British Gas would be the first to receive offers, with limited places and supplier-specific eligibility and terms. Other suppliers may participate.

Ofgem estimates that a customer taking both gas and electricity through a pilot offer could pay about £150 less a year in standing charges than under the price cap. That figure is split across both fuels, so a gas-only customer might not receive the full reduction. It is a reduction in fixed charges, not a promised £150 saving on the total bill.

The regulator also warns that pilot tariffs may not be cheaper than other available deals. Suppliers are expected to recover more through the unit price, so suitability depends on consumption. Availability, prices and eligibility can change; ask the supplier for the tariff information label and personalised annual estimate rather than relying on the pilot headline.

Calculate the break-even gas use

The break-even point is the annual gas use at which two tariffs cost the same. First calculate the annual standing-charge saving. Then divide it by the extra cost per kWh on the lower-standing-charge tariff.

Break-even kWh = annual standing-charge saving in pounds ÷ unit-rate increase in pounds per kWh. Below that usage, the lower-standing-charge option is cheaper in this simple comparison. Above it, the lower unit rate wins. If both the daily charge and unit rate are lower, there is no break-even calculation: that tariff is cheaper on those two components, although other terms still matter.

• Step 1: subtract the lower daily charge from the higher daily charge.
• Step 2: multiply that difference by 365 for the annual fixed-cost saving.
• Step 3: subtract the lower unit rate from the higher unit rate and convert pence to pounds.
• Step 4: divide the annual saving by the unit-rate difference.

Worked example: when does the lower charge stop saving money?

Suppose tariff A uses Ofgem’s Great Britain average Direct Debit gas cap rates for 1 October to 31 December 2026: 7.97p per kWh and 29.68p per day. Tariff B is an illustrative offer at 8.97p per kWh and 10p per day. It is not a real supplier quote.

Tariff B saves 19.68p a day in standing charges: £0.1968 × 365 = £71.83 a year. Its unit rate is 1p per kWh higher, or £0.01. The break-even point is £71.832 ÷ £0.01 = 7,183.2 kWh a year. A home using less than about 7,183 kWh would pay less on tariff B in this example; a home using more would pay less on tariff A.

At 5,000 kWh, tariff A costs £506.83 and tariff B costs £485.00, so B saves £21.83. At 10,000 kWh, tariff A costs £905.33 and tariff B costs £933.50, so B costs £28.17 more. Keep full precision until the final penny and repeat the calculation with the actual regional rates in your offer.

Illustrative figures include only the unit rate and standing charge. Tariff B is hypothetical, and actual offers vary.

Use a reliable annual gas figure

Look for annual consumption in kWh on a recent bill, statement or online account. Prefer a period based on actual meter readings. Do not compare tariffs using one cold month multiplied by twelve: most gas-heated homes use far more in winter than summer, so that can exaggerate annual demand.

If the supplier provides an estimated annual consumption, compare it with at least twelve months of your own bills. Check whether estimated readings, a move, a meter exchange or a change in household has distorted the history. Our high gas bill checklist helps separate real use from billing changes.

Have only meter readings? Use the gas units to kWh guide to convert the difference, or enter two readings, dates and tariff rates in the gas bill calculator. A full year is best for tariff comparison; a short measured period is still useful for checking the arithmetic.

Check the whole tariff before switching

Citizens Advice recommends considering your budget, meter type and specific needs when choosing an energy tariff. For a lower-standing-charge offer, record the gas and electricity terms separately. A dual-fuel headline can hide the fact that most of the fixed-charge reduction or unit-rate increase sits on one fuel.

Compare the exact unit rate, standing charge, contract length, exit fee, payment method, price-change rules and end date. Check whether the tariff is fixed or variable and whether the price cap applies. The cap limits rates on default tariffs; it does not limit the total bill and does not make every alternative tariff cheaper.

Ask what happens when the pilot or fixed term ends, whether you need a smart meter, and whether a discount depends on Direct Debit or online billing. Keep a copy of the quote. If affordability is the problem, do not switch on price alone: contact the supplier about an affordable plan and see our gas bill payment help.

• Use: annual gas and electricity kWh from recent bills.
• Price: both unit rates and both daily charges, including VAT where applicable.
• Terms: fixed or variable, duration, exit fees and what follows the deal.
• Practical fit: payment method, meter requirements, customer service and support needs.

Who might benefit — and who should be cautious?

A genuinely low-use household may benefit because the daily saving matters more relative to the gas it buys. That could include a small well-insulated home, a property using another main heating source, or a home left empty for long periods. The calculation, not the household label, decides.

A household with gas central heating, high hot-water demand or a larger property should be cautious about paying a higher unit price. Consumption can also rise after a cold winter, a change in occupancy or more time at home. Test at least one higher-use scenario instead of assuming last year will repeat.

Do not reduce heating below a safe and comfortable level merely to make a tariff work. If someone is older, disabled or has a health condition affected by cold, factor that need into the comparison. A tariff should fit realistic use, not depend on unsafe rationing.