What standard credit means for your energy bill
Most of us never think about how we pay for energy. It was set up years ago, it ticks along, and the bill arrives. But the method you use matters, because Ofgem has described standard credit as the most expensive way to pay.
On 29 October 2026, the Government and Ofgem set out a new energy debt strategy. Among the debt measures is a line about payment methods: Ofgem is exploring whether standard credit should remain the default way of paying for energy. Nothing has been decided, but it’s worth knowing where you stand.
Doing nothing about how you pay is a quiet way to end up spending more than you need to, so a quick check is worth the minute it takes.
What is standard credit?
Standard credit is a way of paying for energy after you’ve used it, rather than by direct debit or through a prepayment meter. You get a bill and pay it by whichever method your supplier allows.
Ofgem’s press release calls it “the most expensive method of payment”. It doesn’t give a figure for the gap, and the difference depends on your supplier, your tariff and your usage. The sensible move is to look at your own bill and see what it says.
If you’re not sure how you pay, check the payment section of your latest bill or your online account. It will name the method.
What has Ofgem said about standard credit?
Ofgem said it’s exploring whether standard credit should remain the default way of paying for energy, and that it will work with suppliers to support the expansion of smart pay as you go options. That’s all that has been announced so far.
The same release describes Smart Pay As You Go, which is prepayment on a smart meter, as the cheapest payment method, and says it is popular with many consumers who feel they have more choice and control over how they manage energy costs. Ofgem says it wants to support more of those options.
It’s part of a wider package. The strategy also includes a one off Debt Relief Scheme, reforms to how people set up accounts when they move home, and reviews of the rules on involuntary prepayment meters and the Priority Services Register. Our earlier post on the energy debt relief scheme covers the background to the scheme, though it describes the earlier phased version of the plan rather than the single phase announced this week.
Key takeaways
- Ofgem calls standard credit the most expensive way to pay for energy.
- Ofgem is exploring whether standard credit should remain the default method.
- Ofgem says Smart Pay As You Go is the cheapest method and wants to see more of it.
- No figure has been published for what moving off standard credit saves one household.
- Nothing has changed for you yet, so check your own bill.
How much could changing the way you pay save?
Less than a quick read of the announcement suggests, and nobody has published a figure for what moving off standard credit saves one household.
Government analysis quoted by Ofgem says that modernising and reforming payment methods, alongside reform of the home moves process, could save a typical household almost £30 by 2030, and over £10 a year in that year, rising to almost £20 a year in future years. That is a single estimate covering those two reforms together.
Ofgem’s list of measures also attaches a figure of almost £20 a year to the payment methods measure, which covers reviewing standard credit and promoting Smart Pay As You Go as one item. It is not a published figure for Smart Pay As You Go on its own, and it appears to be the same “almost £20 a year” that turns up in the combined estimate. The two should not be added together.
So the honest summary is this. The package as a whole is estimated to be worth something in the region of £10 a year to a typical household around 2030, growing after that. What you would save by changing payment method has not been published, because it depends on your supplier, your tariff and how much you use.
The tariff itself is usually the bigger lever. Our guide to the best energy tariff in 2026 explains what to look at beyond the payment method.
Should you change how you pay for energy?
You should check, because there’s no reason to pay more than you need to. If you pay by standard credit, ask your supplier what other methods are available and whether the price changes.
A prepayment meter, even a smart one, isn’t right for everyone. It can suit people who like to keep a close eye on spending, but it can also be stressful if money is tight. Ofgem is reviewing the rules around involuntary prepayment meters, so the protections for vulnerable customers are under review too. Given that the published saving is modest and not specific to you, this is a decision to make on how you want to manage your money, not on a number.
If you’re struggling with a bill, speak to your supplier early. Our guide to energy debt help covers what you can ask for.
When you check, write down three things: how you pay now, what your supplier says about other methods, and whether your unit rate or standing charge changes with the method. Then compare the answer with what other suppliers offer for your home.
If you do decide to change, ask for the change in writing or check it appears in your online account. A quick confirmation now saves a confusing bill later.
Roo’s view is that a five minute check beats a five year habit.
Frequently asked questions about standard credit
- Is standard credit the most expensive way to pay for energy?
- Ofgem’s press release describes standard credit as the most expensive method of payment. It does not give a figure, and the gap depends on your supplier and tariff.
- Is Ofgem scrapping standard credit?
- No. Ofgem has said it is exploring whether standard credit should remain the default way of paying for energy. No decision has been announced.
- How much would I save by switching off standard credit?
- No figure has been published for a single household. The government estimate of almost £30 by 2030, or over £10 a year in 2030, covers payment method reform and home moves reform together, not your own bill.
- What is Smart Pay As You Go?
- Ofgem describes it as smart prepayment, and says it is the cheapest payment method. Ofgem is working with suppliers to support more of these options.
- How do I find out how I pay for energy?
- Check the payment section of your latest bill or your online account. It will name your payment method.
Sources
- Ofgem: New circuit breaker strategy launched to help households get out of energy debt supports the description of standard credit as the most expensive method of payment, the review of whether it remains the default, the Smart Pay As You Go measure and the wording about choice and control, and every government savings estimate quoted above.
Checked 30 October 2026.
If you want to see what other deals are on offer for your home, a comparison takes a few minutes, and the right deal could cost you less depending on your usage.
