Martin Lewis is celebrating the Government's decision to scrap the £108 gas standing charge, declaring an end to what he has branded an “energy poll tax”.
The Money Saving Expert founder said he was “very pleased” after meeting Chancellor John Healey, who confirmed the fixed charge will be removed in 2027.
The move marks a major victory for Mr Lewis, who said he had campaigned against standing charges for around six years.
What are gas standing charges?
Standing charges are added to gas bills regardless of how much energy a household uses, meaning customers can face costs even when they make efforts to cut consumption.
Mr Lewis has long argued that the system unfairly penalises people who use less gas, including those trying to keep their bills down.
Announcing the news, he said: “I have confirmation that the standing charge on gas bills is to be scrapped in 2027. I've been campaigning on this for about six years, so I am very pleased to hear it.”
He added: “It is a moral hazard. It disincentivizes people from cutting their bills. It's a poll tax on energy, if you like.”
Martin Lewis welcomes end to £108 gas standing charge
The typical gas standing charge costs around £108 a year, according to Mr Lewis.
Under the planned changes, the charge will be removed and the costs shifted into the unit rate customers pay for each kilowatt hour of gas they use.
Mr Lewis said he did not yet know the final increase to unit rates, but estimated it could be just under 1p per kilowatt hour.
The changes could come into effect with the October 2027 energy price cap, although January 2028 is another possibility. The exact timing has yet to be confirmed.
For households that use very little gas, scrapping the fixed fee could mean no longer paying the same daily charge as a much heavier user simply for having a gas supply.
The reform is expected to benefit around 60% of households, with the Treasury estimating an average annual saving of £45 for those who gain.
Martin Lewis explains who could save money
Although Mr Lewis welcomed the announcement, he warned that the change would not mean every household pays less.
Because the costs will be transferred to unit rates, people who use more gas could end up paying more.
He estimated the dividing line could be around 12,500 kilowatt hours of gas a year, although the final figure will depend on the rates eventually set.
Around 40% of households could pay more under the new structure, according to his estimate.
Mr Lewis also cited research by Nesta suggesting the majority of people in income groups below £100,000 would be better off following the change.
He said vulnerable households with high energy use may need additional support if energy prices remain elevated when the reform comes into force.
Electricity standing charges could be next
The gas announcement could also be the first step towards a wider shake-up of energy bills.
Mr Lewis said Mr Healey would speak to Ofgem about how electricity standing charges could be removed, too.
However, he said the Chancellor had described this as “trickier” and indicated it would take longer.
For now, the confirmed plan relates to gas standing charges, with no timetable announced for electricity.
The reform will primarily affect standing charges under the energy price cap. Suppliers will still be able to offer different pricing structures on other tariffs.
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Martin Lewis tells households not to rush fixed energy deals
Mr Lewis also reassured people who already have a fixed energy tariff, saying the planned changes should not alter the rates they have agreed to pay.
He said: “As for those on fixes: if you get a fix now, the rate of your fix is fixed, so this should not affect it. You will pay what you pay and if it has standing charges they will continue.”
For millions of households, the end of the fixed gas fee will be a welcome move away from paying a charge that stays the same regardless of how much gas they use.
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