Standing charges on household gas bills are set to be scrapped. Chancellor John Healey is confirming the change in his Budget on 28 October 2026, and he’s asking the energy regulator, Ofgem, to remove gas standing charges in 2027 or as soon as possible after that.
It’s a headline that’s grabbed a lot of attention, but it isn’t as simple as it sounds. As an independent business energy and water broker, we spend every day reading the small print on energy bills, so here’s what’s actually changing, who wins, who pays more, and what it means if you run a business.
What is a standing charge?
A standing charge is the fixed daily amount you pay to stay connected to the gas or electricity network, whether you use any energy that day or not.
Under the October to December 2026 price cap, the typical household gas standing charge is 29.68p a day. That’s about £108 a year before you’ve boiled a kettle on the gas hob (if you’re not using an electric kettle or something similar) or switched your heating on.
What’s being announced in the Budget?
Here’s what we know so far:
- Gas only: The announcement is about gas standing charges.
- Households only: It’s aimed at the 23 million or so homes on gas. None of the reports we’ve seen mention business energy contracts.
- Not straight away: The government wants Ofgem to remove the charge in 2027, or as soon as possible after. It’s expected to line up with a price cap change on 1 October 2027 or 1 January 2028.
- Savings for most, not all: The Treasury expects around 60% of households to save an average of £45 a year. It’s promised targeted help for a small number of households that won’t see a saving automatically.
The Budget speech is still to come as we write this, so we’ll update this article if any of the detail changes.
The cost doesn’t disappear, it moves into your unit rate
When the standing charge goes, its cost moves into the unit rate, the price you pay for each kWh of gas you use.
On our own maths, spreading that £108 across a typical household’s gas use adds roughly 1p per kWh, so a typical gas unit rate of 7.97p could end up closer to 9p.
And that’s before the next price cap. Cornwall Insight’s projection for January 2027 already puts the typical gas unit rate at 9.76p per kWh, higher than 9p on its own. Move the standing charge into that rate as well and you’re looking at around 10.7p per kWh.
So who comes out ahead?
- Low gas users: You’re likely to pay less, because you’re no longer paying a fixed daily fee.
- Higher than average users: You’re likely to pay more, because every kWh carries a share of that cost. The government has said it will set out targeted help for households that don’t see an automatic saving.
Will the price cap change?
The price cap is made up of two parts: a cap on the unit rate and a cap on the standing charge. Ofgem sets both every three months. The costs behind a standing charge can’t be removed, only moved to another part of the bill.
What that means for the forecasts:
- January 2027 cap: Ofgem announces it by 25 November 2026. With the change due in 2027 at the earliest, it won’t affect the January 2027 cap.
- Where prices are heading: Cornwall Insight’s September forecast points to a rise of around 16% from January 2027, with the typical gas unit rate going from 7.97p to 9.76p per kWh and the daily standing charge from 29.68p to around 31p. That forecast was made before the Budget.
You can check the latest cap rates on Ofgem’s price cap rates page.
Will businesses lose their standing charges too?
You might have heard businesses mentioned alongside this story on some established radio programmes. We don’t think businesses are included. Everything announced so far is about household gas bills.
Your business energy contract is different in a few ways:
- No price cap: Your unit rates and standing charges are set in your contract, not by Ofgem’s quarterly cap.
- Fixed for your term: If you’re on a fixed contract, your rates are locked for the length of the deal, whatever happens to the cap.
- Standing charges vary a lot: Business standing charges depend on your meter, your supplier and your site.
We’ll be keeping a close eye on every Budget announcement. If anything changes for business customers, we’ll update this article and let our customers know straight away. Keeping you ahead of news like this is just one more reason we’re outstanding in our field.
What should your business do?
You don’t need to wait for the Budget to get your energy costs under control. Whether your contract is up for renewal next month or next year, it pays to know where you stand.
At Black Sheep Utilities, we can:
- Check your current rates: We’ll look at your unit rates and standing charges and tell you whether they’re fair for a business of your size.
- Plan your renewal: We’ll keep an eye on your end date so you’re never rolled onto expensive out-of-contract rates.
- Find the right contract: We compare business gas prices and electricity prices from suitable suppliers and present the options that best suit your business, including the balance between unit rate and standing charge that fits how you use energy.
- Validate your bills: If something on a bill doesn’t look right, our dedicated team will chase it with your supplier for you.
If you run your business from home, the household changes will apply to your home gas bill, so it’s worth knowing which side of that typical use you sit on.
Frequently asked questions
Are standing charges being scrapped for everyone?
No. The announcement covers gas standing charges on household bills, and none of the reports we’ve seen mention business energy contracts.
When will gas standing charges be removed?
The government has asked Ofgem to remove them in 2027 or as soon as possible after. It’s expected to line up with a price cap change on 1 October 2027 or 1 January 2028.
Will my gas bill go down?
If you use less gas than a typical household, it’s likely to. If you use more, it’s likely to go up, because the cost of the standing charge moves into the price you pay for each kWh.
Does the price cap still include standing charges?
Yes. Until Ofgem changes the rules, the cap has a unit rate and a standing charge. Once the gas standing charge goes, that cost is collected through the unit rate instead.
Will my business energy standing charge go?
We don’t expect it to. Business energy isn’t covered by the price cap, and your standing charge is set in your contract. We’re watching the Budget closely and will update this article if that changes.
Talk to our energy experts
Not sure what the Budget news means for your business, or whether your standing charge is too high? Let us take a look. Book an appointment with our Energy Team, get a quote, or call us on 01273 914000. You’ll get straightforward advice from energy experts who are outstanding in their field.