Chancellor John Healey will ask Ofgem to scrap gas standing charges for 23m homes, with the Treasury saying 60% of households would save an average £45 a year.
Mr Healey is due to announce the move in his first budget statement to the Commons on Wednesday. The Guardian reported that the charge currently costs a typical household £108 a year.
What would change on your bill
The standing charge is a daily amount that suppliers bill whether or not a home burns any gas. HuffPost UK put it at roughly 29p a day.
Removing it does not mean £108 comes off the bill. According to Brit Brief, the costs the charge covers would move into the unit rate, the price paid for each unit of gas used.
That is why the headline saving is £45 rather than £108, and why it is an average. Households that use little gas would gain most. Heavy users could see a smaller saving or, potentially, a higher bill.
The Treasury figure covers 60% of households. The Guardian’s report also describes the group as two-thirds of households, but the Treasury’s own number is 60%. The Treasury has not said what happens to the remaining households in the material seen so far.
Mr Healey said the charges were “unfair and outdated”, according to the Guardian. HuffPost UK quoted him as promising “extra support for those who need it”, though no detail on that support has been reported yet.
When would people see it?
There is no firm date. The Treasury says Mr Healey will ask Ofgem to remove the charges “in 2027 or as soon as possible after”, as AOL carried in its report of the announcement.
Ofgem, the regulator for Great Britain, sets the energy price cap and so would have to carry out the change. The cap is reviewed every three months. Nothing has been published on which quarter would take the first change, or how it would apply to customers on fixed deals.
For now, then, nobody’s bill changes. Anyone hoping for a £45 cut should treat it as a possible saving some time after the start of next year, not a figure to budget around.
The announcement follows the VAT cut on electricity that took effect this month. The Guardian said that cut left the October price cap £45 a year lower than it would otherwise have been.
Greg Jackson, chief executive of Octopus Energy Group, welcomed the plan. He said most customers would see lower gas bills, with bigger savings for those who can move to heat pumps.
Ofgem has not yet set out how it would carry out the change.
Sources: The Guardian, HuffPost UK, Brit Brief, AOL
This story was compiled by the MDW Newsdesk with AI-assisted tools, using the reporting credited above.
