Standing Charges and Unit Rates Explained

Every domestic gas and electricity bill in Great Britain is built from two numbers. One is charged per day and does not move. The other is charged per unit and only moves when you use something. Almost every complaint about an energy bill is really a complaint about one of the two, and telling them apart is the whole of reading a bill properly.

This guide covers the two numbers on a domestic supply, how Ofgem caps them, and what changed on 1 October 2026. It does not cover business supply, which is priced differently and is not capped.

What the Two Numbers Are

The standing charge is a fixed amount for each day you are connected, quoted in pence per day. You pay it for all 365 days of the year whether you are at home or not.

The unit rate is the price of each kilowatt hour (kWh) you use, quoted in pence per kWh. A kilowatt hour is one kilowatt of power drawn for one hour, and it is the unit both fuels are billed in. Gas is metered in cubic metres and converted to kWh on the bill.

Gas and electricity each have their own pair, so a dual-fuel household is looking at four numbers rather than two.

Your bill for a period is:

• the standing charge, multiplied by the number of days in the period, plus
• the unit rate, multiplied by the kWh you used

There is nothing else in it apart from VAT, credits and any discount your tariff carries.

What the Standing Charge Pays For

The standing charge covers the cost of getting energy to your address rather than the energy itself. It carries the maintenance of the cables and pipes, the cost of your meter, the network operator's charges for your area, and a share of the industry costs suppliers are required to recover, including the cost of taking on customers whose supplier has failed.

None of that changes with how much you use, which is why the charge does not either. It is the part of the bill you cannot do anything about by turning things off, and for a household that uses very little it is the larger half.

What the Unit Rate Covers

The unit rate carries the wholesale cost of the gas or electricity itself, the supplier's cost of buying it in advance, policy costs recovered per unit, and VAT.

Wholesale cost is the part that moves most, and it is why the cap changes every three months while the standing charge tends to drift rather than jump. A unit rate quoted on a comparison page, on your bill and in an Ofgem announcement are all the same measure and can be compared directly, as long as all three are on the same VAT basis.

Worked Example: Two Households, One Set of Rates

Take the electricity rates capped for 1 October to 31 December 2026: 26.32p per kWh and 54.83p per day (Ofgem, announced 26 August 2026). Both households below are on the same tariff, in the same region, and neither is doing anything wrong.

The standing charge for a full year is the same for both:

365 days × 54.83p = £200.13

Household A uses 2,500 kWh, which is Ofgem's typical figure for a domestic electricity supply:

• units: 2,500 × 26.32p = £658.00
• standing charge: £200.13
• total: £858.13, of which the standing charge is 23%

Household B uses 1,000 kWh — a small flat, one person, out most of the week:

• units: 1,000 × 26.32p = £263.20
• standing charge: £200.13
• total: £463.33, of which the standing charge is 43%

Household B uses 40% of the electricity Household A uses and pays 54% of the bill. That is not a mistake on anybody's part. It is what a fixed daily charge does to a small bill, and it is the reason advice to "use less" has a floor under it that no amount of care gets past.

Where the Price Cap Fits, and What It Does Not Cap

Ofgem's default tariff cap sets a maximum unit rate and a maximum standing charge for a standard variable tariff. It does not cap your bill. The figure quoted in the news is what the capped rates come to for a household using Ofgem's typical annual amounts (2,500 kWh of electricity and 9,500 kWh of gas), paying by direct debit, over 365 days.

Here is what moved between the two most recent periods.

Ofgem default tariff cap, capped rates including VAT

Rate	1 Jul – 30 Sep 2026	1 Oct – 31 Dec 2026	Change
Electricity unit rate	26.11p per kWh	26.32p per kWh	+0.21p
Electricity standing charge	57.19p per day	54.83p per day	−2.36p
Gas unit rate	7.33p per kWh	7.97p per kWh	+0.64p
Gas standing charge	29.04p per day	29.68p per day	+0.64p

The electricity standing charge fell and the electricity unit rate rose, which pulls in opposite directions depending on how much you use. At Ofgem's typical electricity consumption the two roughly cancel: £861.49 in July against £858.13 in October, a fall of £3.36. Gas is where the increase is, at £63.13 more across the year on typical use, almost all of it in the unit rate. A household with electric heating and no gas therefore sees something close to nothing from an announcement reported as a rise of about £60.

One number worth explaining rather than hiding. Ofgem's published headline for the October quarter is £1,723.36 a year, and working it out from the published rates above gives £1,723.61. The 25p is rounding: the headline is calculated in Ofgem's levelisation annex from rates carried to more decimal places than the ones it publishes for consumers. It is the same figure, not a different one.

Source: Ofgem default tariff cap level model v1.31 and Annex 9 (Levelisation) v1.11, published 26 August 2026. Figures as recorded on 27 August 2026. Direct debit, dual fuel, including VAT.

Why Your Region Changes the Answer

Ofgem does not set one cap. It sets fourteen, one for each charge restriction region, because what the local network costs to run differs by area. On the same typical-use, direct-debit, dual-fuel basis, the cheapest region for 1 October to 31 December 2026 is the East Midlands at £1,672.27 and the dearest is Merseyside and North Wales at £1,804.30 — a spread of £132.03 a year.

The figure in the headlines is the unweighted average of those fourteen. That means it is not what most households pay, and a region can sit above the average without anything being wrong. If you want to know what your cap actually is, the region your address sits in is the thing to look up, not the national number.

Source: as above. The fourteen regional figures and the £132.03 spread come from the same Ofgem model and annex, recorded on 27 August 2026.