Insights ¦ Consumers’ attitudes towards standing charges

Key Take Aways

1. Most consumers perceive standing charges on energy bills as somewhat or very unfair, with nearly two-thirds holding this view.
2. Conversely, the majority perceive unit rates as fair, indicating differing consumer attitudes towards various components of energy pricing.
3. A significant portion of consumers exhibit confusion regarding the trade-off between standing charges and unit rates, with almost a third perceiving both as unfair and fair simultaneously.
4. Preferences lean towards removing or reducing standing charges, with consumers favouring cost transparency and fairness through use-based charges.
5. Consumers who favour lowering standing charges often cite reasons related to transparency, fairness, and actual energy usage.
6. Those who prefer to reduce unit rates tend to value benefits related to ease of bill management.
7. Nearly 3 in 10 consumers favour completely removing standing charges, while about half prefer a structure that reduces standing charges and increases unit rates.
8. Around 1 in 5 consumers are undecided or express no strong preference regarding structural changes to energy bills.
9. Older consumers (aged 55-75), households without children, and those with lower incomes are statistically more inclined to favour eliminating standing charges.
10. Responses differ slightly based on the explanation provided about what standing charges cover, but overall attitudes remain consistent.
11. Factors influencing preferences include energy usage patterns, understanding of bill components, and financial behaviour such as payment type.
12. The research highlights the complexity of designing energy bill structures that balance fairness, transparency, and consumer understanding.

Key Statistics

• 62% of consumers believe standing charges are unfair.
• 54% perceive unit rates as fair.
• 32% of consumers think both standing charges are unfair and unit rates are fair.
• 20% feel both standing charges and unit rates are unfair.
• 51% prefer removing or reducing standing charges and increasing unit rates.
• 9% want to remove or reduce unit rates while increasing standing charges.
• 38% of 55-75-year-olds favour a structural change to remove standing charges and increase unit rates.
• 66% of social grade C2DE consumers see standing charges as unfair.
• 68% of consumers with low understanding of bills perceive standing charges as unfair.
• 67% of households earning below £20,000 annually classify standing charges as unfair.
• The survey was conducted on a representative quota sample of 4,201 adults in Great Britain, with 3,571 responsible for household energy bills.

Key Discussion Points

• Consumer perceptions of fairness significantly differ between standing charges and unit rates.
• Many consumers struggle grasping the economic trade-offs between fixed and variable energy charges.
• Preferences indicate a general support for rising unit rates in exchange for removal or reduction of standing charges, especially among specific demographic groups.
• Diversity exists in consumer priorities: fairness, ease of billing, predictability, and financial control.
• The variability in responses based on question framing suggests some sensitivity to how information about energy charges is presented.
• The findings reflect the complexity of implementing structural change in energy pricing that resonates with consumers.
• Understanding consumer motivations—principle-based versus management ease—is crucial for policy design.
• Awareness campaigns or educational efforts could alter perceptions and preferences by clarifying cost implications.
• The survey’s insights underpin the need for nuanced policy responses that consider consumer heterogeneity.
• The research emphasises the importance of transparent communication about what standing charges and unit rates cover.
• The study indicates that most consumers’ top-of-mind views are influenced by fairness and understanding of bill components.
• Policymakers must consider the diverse attitudes towards energy bill components when designing future pricing models.

Document Description

This article presents the findings of a UK-based omnibus survey commissioned by Ofgem, exploring consumer attitudes towards standing charges in energy bills. Conducted in January 2025, it examines perceptions of fairness, preferences for structural changes, and underlying reasons for these preferences among a representative sample of domestic energy consumers. The report discusses the complexity of balancing fixed and variable charges and highlights how consumer understanding and demographic factors influence attitudes, offering valuable insights for policymakers and industry stakeholders contemplating reforms in energy pricing frameworks.