Our proposed domestic electricity tariff replaces the daily standing charge with a transparent £25 monthly energy subscription.
At first glance, £25 a month may appear more expensive than the current electricity standing charge. But looking only at the fixed charge ignores the much larger saving created by reducing the electricity unit price.
For most households, the subscription would not increase their electricity bill. It would reduce it.
The comparison
We have compared two electricity tariffs.
Current-style tariff
- Electricity: 26p per kWh
- Standing charge: 57.19p per day
- Annual standing charge: £208.74
The 57.19p figure is the average electricity standing charge under Ofgem’s price cap for 1 July to 30 September 2026. The corresponding average electricity unit rate is 26.11p per kWh, which we have rounded down slightly to 26p for this comparison. (Ofgem)
Our proposed tariff
- Peak electricity: 15p per kWh
- Overnight electricity: 7.5p per kWh
- Energy subscription: £25 per month
- Annual subscription: £300
The subscription is therefore £91.26 a year more than the current average electricity standing charge.
But every unit of electricity becomes substantially cheaper.
Household electricity use
Government data show that electricity use generally rises with property size. Flats tend to consume the least electricity, while detached houses tend to consume the most. (GOV.UK)
The latest National Energy Efficiency Data Framework recorded median household electricity use of approximately:
- 1,900 kWh for a purpose-built flat
- 2,400 kWh for a terraced house
- 2,700 kWh for a semi-detached house
- 3,300 kWh for a detached house
These are property-type medians rather than precise bedroom-based figures. For this comparison, we use them as representative examples of a flat, two-bedroom terrace, three-bedroom semi-detached house and four-bedroom detached house.
The national median across all homes in England and Wales was 2,500 kWh in 2024. (GOV.UK)
A conservative overnight assumption
The calculations assume that:
- 80% of electricity is used at 15p per kWh
- 20% is used overnight at 7.5p per kWh
This produces an average electricity price of:
13.5p per kWh
This is a relatively cautious assumption. Households with an electric vehicle, heat pump, immersion heater, dishwasher, washing machine or storage battery may be able to move considerably more than 20% of their consumption into the overnight period.
Annual electricity bill comparison
| Representative home | Annual electricity use | Current tariff | Our tariff | Annual saving |
| Flat | 1,900 kWh | £703 | £557 | £146 |
| Two-bedroom terrace | 2,400 kWh | £833 | £624 | £209 |
| Three-bedroom semi-detached | 2,700 kWh | £911 | £665 | £246 |
| Four-bedroom detached | 3,300 kWh | £1,067 | £746 | £321 |
The calculations include the standing charge or subscription as appropriate.
Flat
A representative flat using 1,900 kWh a year would currently pay:
- Electricity consumption: £494
- Standing charge: £209
- Total: £703 a year
Under our tariff, it would pay:
- Electricity consumption: £257
- Subscription: £300
- Total: £557 a year
That is a saving of approximately:
£146 a year
Even a relatively low-consuming flat would save money.
Two-bedroom terrace
A representative terraced home using 2,400 kWh a year would currently pay:
- Electricity consumption: £624
- Standing charge: £209
- Total: £833 a year
Under our tariff, it would pay:
- Electricity consumption: £324
- Subscription: £300
- Total: £624 a year
That is a saving of approximately:
£209 a year
Three-bedroom semi-detached home
A representative semi-detached home using 2,700 kWh a year would currently pay:
- Electricity consumption: £702
- Standing charge: £209
- Total: £911 a year
Under our tariff, it would pay:
- Electricity consumption: £365
- Subscription: £300
- Total: £665 a year
That is a saving of approximately:
£246 a year
Four-bedroom detached home
A representative detached home using 3,300 kWh a year would currently pay:
- Electricity consumption: £858
- Standing charge: £209
- Total: £1,067 a year
Under our tariff, it would pay:
- Electricity consumption: £446
- Subscription: £300
- Total: £746 a year
That is a saving of approximately:
£321 a year
Why the subscription does not cancel out the savings
The subscription is £91.26 more expensive than the current annual standing charge.
However, the modelled average unit price falls from 26p to 13.5p—a reduction of 12.5p on every kWh consumed.
The additional subscription cost is recovered after approximately:
730 kWh a year
That is only around:
- 61 kWh per month
- 2 kWh per day
A household consuming more than approximately 730 kWh annually would be better off under this comparison.
The government’s lower-quartile household uses around 1,600 kWh a year, while the national median is approximately 2,500 kWh. (GOV.UK)
This means even many relatively low-consuming households would use more than twice the break-even amount.
What about homes that cannot move much electricity overnight?
The policy does not depend on every household becoming an energy expert.
Even where only 10% of consumption is moved to the overnight rate, the effective average unit price would be 14.25p per kWh.
Under that more cautious scenario, the approximate annual savings would still be:
| Representative home | Saving with 10% overnight use |
| Flat | £132 |
| Two-bedroom terrace | £191 |
| Three-bedroom semi-detached | £226 |
| Four-bedroom detached | £296 |
Households do not need an electric vehicle, battery or heat pump to benefit.
Normal background electricity use continues overnight. Appliances such as washing machines, dishwashers and immersion heaters can also be scheduled without requiring complicated daily decisions.
Greater savings for electrified homes
The examples above represent ordinary household electricity consumption. They do not include the additional demand from:
- Electric vehicles
- Heat pumps
- Electric water heating
- Air-to-air heating
- Home batteries
These households would pay the same £25 monthly subscription but purchase more electricity at 15p or 7.5p per kWh.
As consumption increases, the fixed subscription becomes a smaller proportion of the total bill. Electrified households would therefore see some of the largest cash savings compared with electricity costing approximately 26p per kWh.
This is essential if the country wants households to replace petrol, diesel and gas with electricity.
A fairer and more transparent structure
The current standing charge does not represent the full cost of using the electricity network.
Network costs are also included within the unit price, meaning households pay both a visible standing charge and additional network charges hidden inside every unit of electricity.
Our policy separates these costs.
The £25 monthly subscription provides a clear and transparent contribution towards access to the local electricity network. The electricity unit price can then more closely represent the cost of generating and supplying electricity.
The result is:
- A clearly stated network subscription
- A substantially lower electricity price
- Lower bills for ordinary households
- Larger savings for homes moving away from fossil fuels
- A stronger incentive to use spare overnight network capacity
The key point
It is misleading to compare a £25 monthly subscription with the standing charge alone.
The subscription is part of a complete tariff in which electricity falls from approximately 26p to 15p during the day and 7.5p overnight.
For the representative homes modelled here, annual savings range from approximately:
£146 to £321 a year
The subscription does not make electricity more expensive for most homes.
It creates a transparent way to fund access to the network while allowing the cost of the electricity itself to fall substantially.