Gas standing charges are being scrapped. 6 in 10 households will pay less.

On 28 October the Chancellor, John Healey, said he would scrap the standing charge on household gas. He has asked Ofgem, the energy regulator, to do it in 2027 or soon after. It covers about 23 million homes in England, Scotland and Wales.

Today you pay 29.7p a day for gas before you use any, or £108 a year. That’s the Direct Debit average under the October to December 2026 price cap.

Electricity standing charges stay as they are for now. The government says it will work on those with Ofgem over the next year. If you’re on a fixed deal, your rates won’t change until it ends.

The cost doesn’t go away

Suppliers still need the money. Ofgem will add it to the price of each unit of gas instead. We estimate that takes the average unit price from 7.97p to about 8.84p, an extra 0.87p for every kWh you use.

Some reports today quote 9.11p. That divides the £108 by Ofgem’s typical use instead of the average, which would collect about £33 a year more per customer than suppliers get now.

So if you use little gas, you pay less. If you use a lot, you pay more.

Why 6 in 10 households pay less

Once the £108 moves onto the unit price, you come out ahead if you use less gas than the average home, and behind if you use more. The average is about 12,400 kWh a year.

You might expect that to split homes half and half. It doesn’t, because a few big homes drag the average up. Picture a street of ten houses. Nine use 9,000 kWh a year and one large house uses 40,000. The average comes out at 12,100 kWh, so nine of the ten sit below it and pay less.

Britain works the same way, just less extreme. The home in the middle uses 9,500 kWh, which is Ofgem’s typical figure, well below the 12,400 average. That leaves about 6 in 10 households below the average. The Treasury says 60% and Nesta, the charity behind the idea, says 64%. Our own model gives 64.2%, saving £48 a year on average.

What it means at your usage

Who pays more?

Bigger homes, older homes that lose heat, and families who are in all day. People who need to keep warm for their health are in that group too.

Losers also lose more each than winners gain. In our model the average home that pays more pays £86 a year extra, against £48 saved by the average winner. The government says it will set out help “in due course” for a small number of households.

The biggest winners use almost no gas: a flat with a gas hob, or a holiday home that sits empty most of the year. They save close to the full £108.

What is the standing charge paying for?

Mostly the supplier’s own running costs: billing, customer service, IT and meters. Under the current cap, Ofgem allows suppliers £106 a year per gas customer for those costs before VAT. That’s about the size of the whole gas standing charge.

The pipes work differently. For a home, the gas network company charges your supplier more as your yearly use goes up. Across Britain’s 13 gas network areas, that comes to between 1.75p and 2.18p per kWh this year. The pipe costs already follow how much you use.

So the change moves the supplier’s fixed costs onto each unit. That leaves suppliers with a new risk. After a mild winter, homes burn less gas and suppliers collect less towards costs that don’t shrink. A winter with 10% less gas would leave them about £250 million short across 23 million homes. Expect Ofgem to allow for that when it sets the new rules.

What others are saying

Martin Lewis, who has campaigned on this for about six years, called the standing charge “a poll tax on energy” that discourages people from cutting their use. He expects the change at the 1 October 2027 or 1 January 2028 price cap, with “just under a penny per kilowatt hour” added to the unit price. He says “about 60% of people will pay less, 40% will pay more”.

Greg Jackson, who runs Octopus Energy, told BBC Breakfast that “the vast majority of families will be better off”, while “a few sort of typically very large homes that use a lot of gas” will pay a bit more.

Nesta’s analysis says 86% of the poorest households would pay less, against 24% of the richest, because richer homes tend to use more gas. It also flags a small group of low income homes with high gas use who will need help.

Where we land

We agree on the split, and our 0.87p matches Martin Lewis’s “just under a penny”. Two points get less airtime. The homes that pay more lose about £86 a year on average, nearly twice what the average winner saves. And the pipe costs already follow your usage. What moves is the supplier’s own overhead, and with it a weather risk suppliers didn’t carry before.

When will it happen?

Ofgem has to consult first. The price cap changes every three months, so the most likely start dates are 1 October 2027 or 1 January 2028. Until then, nothing changes.

Our estimates use the Ofgem price cap for October to December 2026 (gas, Direct Debit, GB average, VAT included): 29.68p a day and 7.97p per kWh. We assume the change raises the same total, so the extra unit price is the standing charge divided by average use (12,400 kWh, from Nesta). The 6 in 10 figure models household gas use as a lognormal spread with Ofgem’s typical use (9,500 kWh) in the middle and 12,400 kWh as the average. Gas network figures are 2026-27 distribution charges for a household, including exit capacity. Your supplier’s rates may differ.