Standing charge vs unit rate: which energy tariff is cheaper for you?

Why standing charges weigh more on a low-use bill

A standing charge is a fixed daily amount you pay for each fuel whether you use 1 kWh or 10,000 kWh, so the less energy you use, the larger its share of your bill. At the October 2026 cap of 54.83p a day, the electricity standing charge alone costs £200.13 a year (54.83p × 365 days). Gas adds another £108.33 a year (29.68p × 365).

The unit rate is the price of each kilowatt hour (kWh) you actually use. It scales with your usage; the standing charge does not. That is why two households on the same tariff can see very different cost per kWh once the fixed part is spread across their usage.

The table uses the Ofgem price cap rates from 1 October 2026 (Direct Debit, average for England, Scotland and Wales) and Ofgem's typical consumption values. Every figure was worked out with the engine behind our energy tariff comparison calculator.

A low electricity user pays almost a third of the bill before switching anything on. At 500 kWh a year, which is realistic for a small flat that is empty most of the day, the same £200.13 is 60% of a £331.73 bill. Cutting usage saves only the unit rate part, so for a low user the standing charge is the part of the bill worth shopping around on.

How to work out the break-even usage between two tariffs

The break-even usage is the number of kWh a year at which two tariffs cost exactly the same, and you find it by dividing the difference in yearly standing charges by the difference in unit rates. Below that usage the tariff with the lower standing charge wins; above it the tariff with the lower unit rate wins.

The formula is:

Break-even kWh = (standing charge B − standing charge A) × 365 ÷ (unit rate A − unit rate B)

Worked example: capped tariff against a low standing charge tariff

Tariff A is the capped electricity rate from 1 October 2026: 26.32p per kWh and 54.83p a day. Tariff B is an illustrative fixed deal with a lower standing charge and a higher unit rate: 30.50p per kWh and 30p a day. Tariff B is an example for the maths, not a real product.

1. Standing charge difference: (30p − 54.83p) × 365 = −£90.63 a year. Tariff B saves £90.63 in fixed charges.
2. Unit rate difference: 26.32p − 30.50p = −4.18p per kWh. Tariff B costs 4.18p more for every kWh.
3. Break-even: −£90.63 ÷ −£0.0418 = 2,168 kWh a year.

If you use less than 2,168 kWh of electricity a year, Tariff B is cheaper. If you use more, the capped tariff is cheaper.

To repeat this with your own tariffs, enter both unit rates and standing charges, and your annual kWh, in the tariff comparison and break-even calculator. It shows the crossing point for electricity and gas separately, because a dual fuel deal can be cheaper on one fuel and dearer on the other.

If the break-even figure comes out negative, one tariff has both the lower standing charge and the lower unit rate, so it is cheaper at every level of use and no maths about your usage is needed.

The Ofgem price cap from 1 October 2026

From 1 October to 31 December 2026, the energy price cap limits electricity to 26.32p per kWh with a 54.83p daily standing charge, and gas to 7.97p per kWh with a 29.68p daily standing charge. According to Ofgem, these are averages for customers paying by Direct Debit across England, Scotland and Wales, and your own capped rates depend on your region and payment method.

According to Ofgem, there is no VAT on electricity from 1 October 2026 to 31 March 2027, while the gas figures include 5% VAT. The October electricity standing charge fell by 2.36p a day, which saves a household £8.61 a year on the fixed part alone.

The cap limits each unit rate and standing charge, not your total bill. According to Ofgem, a household with typical use will pay £1,723 a year from 1 October 2026, up £60 a year, and without the VAT cut on electricity that figure would have been around £45 higher. Our engine gives £1,723.61 for Ofgem's medium usage of 2,500 kWh of electricity and 9,500 kWh of gas, which matches.

A fixed tariff is only cheaper than the cap if its combination of standing charge and unit rate beats the cap at your usage. The break-even maths above is how you check that.

Ofgem's typical consumption values show whether you are a low or high user

Ofgem's typical domestic consumption values put a low electricity user at 1,600 kWh a year, a medium user at 2,500 kWh and a high user at 3,800 kWh. For gas the figures are 6,000, 9,500 and 14,000 kWh. According to Ofgem's decision of 27 May 2026, these values apply from 1 July 2026 and replaced higher figures (electricity medium was 2,700 kWh and gas medium 11,500 kWh).

Use these only to place yourself roughly. Your real annual usage is on your bill or in your supplier's app as "annual consumption" or "estimated annual usage", and a 20% difference from the typical figure can move you to the other side of a break-even point. In the example above, a household using 2,000 kWh would pick Tariff B, while one using 2,400 kWh would pick Tariff A.

If you do not have a year of bills, add up your main appliances. The appliance running cost calculator turns wattage and hours of use into kWh and pounds at 26.32p per kWh, so you can see how a tumble dryer or electric heater would move you between the low and medium bands.

Economy 7 only saves money if enough of your use is off-peak

An Economy 7 tariff charges a cheaper rate for 7 hours at night and a dearer rate for the rest of the day, so it beats a single rate tariff only when a large enough share of your electricity is used off-peak. According to Ofgem, the peak and off-peak rates on a capped multi-rate tariff together cannot be more than the price cap.

Ofgem's typical consumption values assume a multi-rate home uses 42% of its electricity off-peak and 58% at peak. The break-even share is (peak rate − single rate) ÷ (peak rate − off-peak rate).

Worked example: Economy 7 against the single rate cap

Take illustrative Economy 7 rates of 30.50p peak and 17.00p off-peak, with the same 54.83p standing charge, against the single rate cap of 26.32p. The usage is Ofgem's medium multi-rate figure of 3,400 kWh a year. These Economy 7 rates are an example; your supplier's own rates are on your bill.

Break-even share: (30.50p − 26.32p) ÷ (30.50p − 17.00p) = 31%. Use more than 31% of your electricity at night and Economy 7 wins.

Economy 7 suits homes with storage heaters, an electric hot water cylinder on a night timer or an electric car charged overnight. A home that cooks, works and runs the washing machine in the daytime can pay more on Economy 7 than on a single rate. Your meter shows two readings, so you can work out your own off-peak share from two sets of readings a few weeks apart.

Exit fees can cancel out a small saving

An exit fee is the charge for leaving a fixed tariff before it ends, and it can take years to recover when the saving from switching is small. According to Ofgem, you may have to pay your old supplier an exit fee if you leave a fixed rate tariff early.

In the break-even example, a low user on 1,600 kWh a year saves £23.75 a year, or £1.98 a month, by moving to the low standing charge tariff. With an illustrative £75 exit fee, the payback is £75 ÷ £1.98 = 37.9 months, so the switch is paid back in month 38 and leaves you £51.25 worse off after the first year.

The fee does not apply near the end of a deal. According to Ofgem, suppliers cannot charge exit fees for switches within the 49 days before a fixed term contract ends, and must contact you 42 to 49 days before the end with that information. Check your end date on your bill and switch inside that window if you can.

Enter your exit fee in the energy tariff calculator and it will show the month in which the fee is paid back and your net position after the first year.

What to do if standing charges are a large part of your bill

If standing charges make up more than a third of your bill, you are a low user and your best saving comes from the tariff structure, not from using less. These steps follow from the maths above:

• Compare on your own usage. Price comparison results often assume Ofgem's medium usage, which can favour low unit rate tariffs that cost a low user more.
• Look at the standing charge first on fixed deals. At 1,000 kWh a year, every 10p a day off the standing charge is worth £36.50 a year, while every 1p off the unit rate is worth £10.
• Check each fuel separately. A home that uses gas only for a hob pays £108.33 a year in gas standing charges at the cap, which may cost more than the gas itself.
• Remember empty properties. A second home or a property between tenants still runs up standing charges every day the supply is connected.

If you are a high user, the unit rate matters more. Cutting 500 kWh a year, for example by running a 2 kW heater for 250 fewer hours, saves £131.60 at 26.32p per kWh. The appliance electricity cost calculator shows which appliances are worth changing.