The energy price cap is set for another shake-up. Ofgem’s final review, published in April 2026, proposes the most significant overhaul of network charging since privatisation, and it will land on every household bill within two years.
As reported by Dentons, the regulator’s final report signals a shift in how costs are allocated between fixed standing charges and variable unit rates. For a typical 3-bed semi using 12,000 kWh of gas and 3,000 kWh of electricity, the change could mean a lower fixed daily fee but a higher cost per kWh used. The net effect on annual bills depends entirely on how much energy you actually consume.
Who gains, and who loses
Ofgem’s logic is straightforward: households that use less energy should pay less overall. Under current rules, standing charges cover about 20% of a dual-fuel bill, roughly £300 a year for the average home. The review proposes reducing that fixed element, which benefits low-users such as single-person households or those with high-efficiency homes. But heavy users, older houses with poor insulation, or families with electric heating, will see their bills rise if the unit rate increases to compensate.
The catch is that the review is still a consultation. Ofgem has not confirmed exact numbers, and the final implementation date is likely 2028. The Energy Saving Trust has previously argued that standing charges penalise the fuel poor disproportionately, because they cannot reduce the fixed cost by cutting usage. If the review shifts costs to unit rates, it could make energy more expensive for those who need the most heat, unless accompanied by targeted support.
What it means for eco-home upgrades
The review also touches on network reinforcement costs for heat pumps and electric vehicles. Currently, households installing a heat pump can face connection charges of £1,000 to £3,000 if the local grid needs upgrading. Ofgem’s report signals a move to socialise some of these costs across all billpayers, rather than loading them onto early adopters. That would cut the upfront cost of a heat pump installation by hundreds of pounds, a meaningful boost to the £7,500 Boiler Upgrade Scheme grant.
But there’s a trade-off. If network costs are spread across all households, the standing charge for everyone rises, exactly the opposite of the first reform. Ofgem will need to balance these competing priorities, and homeowners should expect a phased approach.
Three things to do now
First, dig out your last year’s bills and calculate your actual kWh usage. If you’re a low user, the shift to higher unit rates will hurt less; if you’re high, lock in efficiency measures before the change hits. Second, check if your local distribution network operator (DNO) offers a free heat pump feasibility study, some do, and the review’s network cost reforms could make that connection cheaper in 2027. Third, write to your MP. The consultation is open until September 2026, and Ofgem has said it will consider public responses. A single email from a constituent carries weight.
The review is not yet law. But the direction is clear: energy pricing is being rewired to reward efficiency and penalise waste. For homeowners, the smart money is on insulation, heat pumps, and solar, before the tariff landscape shifts.
Frequently Asked Questions
The review proposes reducing fixed standing charges and increasing variable unit rates, so low-energy users like single-person households may see lower bills, while heavy users in poorly insulated homes could pay more. The exact impact depends on your annual kWh usage, but changes won't take effect until 2028 at the earliest.
Yes, if Ofgem socialises network reinforcement costs across all billpayers, connection charges for heat pumps could drop from £1,000–£3,000 to a few hundred pounds. Combined with the £7,500 Boiler Upgrade Scheme grant, this could cut your upfront cost significantly, though it may raise standing charges for everyone.
Ofgem's 2026 review proposes lowering the fixed daily standing charge, which currently adds about £300 a year to a typical dual-fuel bill, and raising the cost per kWh. This aims to reward low-energy users but could increase bills for homes with electric heating or poor insulation.
Calculate your actual kWh usage from last year's bills to see if you're a low or high user, then consider efficiency measures like insulation if you're high. Also, ask your local DNO about free heat pump feasibility studies, as connection costs may drop from 2027 under the new rules.
The review aims to lower standing charges, which disproportionately affect fuel-poor households that can't cut fixed costs by reducing usage. However, shifting costs to unit rates could make energy more expensive for those needing the most heat, so Ofgem may need targeted support to balance the impact.
