Burnham asks ministers to plan removal of gas standing charges

Prime Minister Andy Burnham has asked ministers to draw up a plan to remove fixed daily standing charges from gas bills, saying they should report back “at the earliest opportunity”. How the charges would be recovered—and whether households would save money—remains unsettled.

Standing charges apply whether or not a household uses gas. They help pay for maintaining the pipes and other infrastructure that deliver energy, as well as schemes supporting low-income households. Energy UK said the effect on bills would depend on how the costs were shifted.

One option, proposed by research firm Nesta, is to move the charges into the price paid for each unit of gas. That would mean customers paid according to their consumption: people who use little gas could benefit, while heavier users might pay more. Nesta’s director of sustainable future, Madeleine Gabriel, said the change would help those worst hit by rising energy prices. The foundation estimates it could cut a typical annual bill by £27.

The change could also have drawbacks for some vulnerable households. Citizens Advice has warned that people on low incomes who use a lot of energy could be penalised if costs were shifted to unit rates.

Ofgem has consulted on standing charges for nearly two years and is piloting tariffs with lower charges, but has yet to draw firm conclusions. Average daily standing charges are 29.7p for gas and 54.8p for electricity. Burnham’s request concerns gas charges; his official spokesman said electricity bills had already benefited from a VAT cut.

Burnham raised the proposal during Prime Minister’s Questions while defending approval of the Jackdaw gas field. He also argued that investment in renewables could bring bills down substantially by reducing the link between gas and electricity prices. UK electricity prices are mainly set by gas prices, but the government has not detailed how its proposed standing-charge reform would work.