The regulator will consult on introducing an option under the price cap to include zero standing charge tariffs alongside existing tariffs, offering consumers the ability to choose what is right for them.

Some suppliers already offer low- or no-standing charge tariffs, but it is not universal, and Ofgem said it believes more choice is needed for all consumers, including those in debt.

Tens of thousands of consumers responded to Ofgem’s call for input on standing charges, with many asking for standing charges to be removed altogether, saying that reducing or removing standing charges would make it easier for them to manage their bills or pay back debt.

However, there was also evidence of the risk of harm to some very vulnerable consumers who are high users of energy, often for medical and health needs if the fixed costs currently covered by standing charges were moved to unit rates, which would see their bills rise significantly.

The regulator has also set out its debt strategy, which aims to tackle the growing impacts of rising debt in the energy system, and to create lasting change in the way debt is managed and customers in debt are supported.

Ofgem said it followed best practice guidance from the finance sector to propose new supplier standards that will make it easier for the customers struggling to pay their bills to get support. This includes ensuring a consistent approach is taken when assessing a customer’s ability to pay, with the help of charities and debt support agencies. Consumers would also have greater clarity on how their supplier can help with debts which will help limit the risk of consumers getting into debt in the first place, and of unsustainable levels of debt building up in the future.

Alongside this, Ofgem has also announced proposals to address debt that was built up during the energy crisis, when energy bills reached unprecedented levels. It said the level of debt built up during that period has become unsustainable and requires a bespoke, one-off solution to tackle it that will drive down the costs of debt in the long term for the benefit of all consumers.

Ultimately any scheme would be cost neutral, in that it would lead to lower overall bills against the counterfactual of not intervening, and contribute to lowering the overall cost of debt and therefore bills over time.

Currently, all consumers pay through their energy bills for the cost of debt to suppliers – but the customers’ debts themselves are not always forgiven. And the extreme levels of debt remaining from the energy crisis are unlikely to be fully recovered without intervention.

Tim Jarvis, director general markets at Ofgem, said: “We know that many households continue to struggle with bills after the events of the energy crisis, which is why earlier this year, we took steps to consider all the issues around affordability and debt – including the impact of the standing charge.

“Today we’re setting out the next steps in what Ofgem can do to meet these challenges, as part of our work to make sure the energy market is working in consumers’ interests.

“Many people feel very strongly that standing charges are unfair and prevent them from being able to manage their bills effectively.

“We want to give consumers the ability to make the choice that’s right for them without putting any one group of consumers at a disadvantage. And by having a zero standing charge tariff, we would create that choice for everyone.

“We have also set out plans to increase and standardise the support people struggling with energy debt will receive, as well as options for practical help for those households who are in real difficulty with debt built up during the energy crisis.

“We will continue to use all the tools at our disposal to support customers but know there is more to do, so it is important that all of us – government, the sector and charities – do everything we can to help those who need it.”

Derek Mitchell, CEO of Citizens Advice Scotland, said: “These announcements from Ofgem comes as hundreds of thousands of households across Scotland face real hardship because of energy costs. Citizens Advice Scotland (CAS) has long called for changes to standing charges as part of the wider reform our energy markets urgently need. Problems are rooted in markets not people.

“While there are some people in some circumstances who could benefit from the proposed introduction of these new tariffs, in reality this is about moving costs not saving costs. This is likely to make billing more complicated and harder for people to know what choices to make, emphasising the need for access to good quality, free advice.

“And because energy remains unaffordable for so many, it also risks even more people going without heating as they try everything to save costs. At CAS, through our network of CABs and Extra Help Unit we know the devastating impact that rationing or stopping the use of the heating has on people’s physical and mental wellbeing. In temperatures like today, we all need to be able to heat our homes.

“We welcome the improvements to customer service to those in energy debt that Ofgem are proposing, however this does not nearly go far enough. Energy debt is having an all-consuming effect on people, especially those on the lowest incomes. For people seeking support with energy debt from CAS average debts are £2600 and for those in remote and rural communities this rises to almost £3000.

“We need Ofgem and the UK government to go much further here with both targeted debt write-offs and the introduction of a social tariff.”