The U.K. government plans to ask Great Britain's energy regulator, the Office of Gas and Electricity Markets (Ofgem), to shift gas bills from fixed fees to usage rates in 2027.
Chancellor John Healey said the government would ask Ofgem to make the change in 2027 or, if needed, “as soon as possible afterwards.” He called standing charges “unfair and outdated.”
The Treasury estimates that 60% of households with gas accounts in Great Britain would save an average £45 a year. Households using more than average could pay more as a greater share of the bill depends on consumption. The Treasury also says targeted mitigation is planned for a small number of households; details have not been announced.
Ofgem's price cap for Oct. 1 through Dec. 31 sets the average gas standing charge for direct-debit customers in England, Scotland and Wales at 29.68p a day. MoneySavingExpert estimates that, at current prices, shifting the cost into unit rates would raise the typical gas rate to 9.11p/kWh from 7.97p/kWh.
The plan follows Prime Minister Andy Burnham's earlier request for ministers to examine the charge, as EconoTimes reported in its coverage of the review.
Healey's Budget is scheduled for 8:30 a.m. ET (12:30 UTC) Wednesday. The Office for Budget Responsibility (OBR) is due to publish its economic and fiscal outlook at 9:30 a.m. ET (13:30 UTC).
