Family Member “not using” shared iCloud storage

If she only has the free 5GB plan it should switch automatically when you share your storage plan. If she has a separate larger plan then she needs to switch if she wants to use the shared plan. See the information in Share iCloud+ with your family - Apple Support including the following:

When you share iCloud+, any family members using the free 5GB plan are added to your family plan automatically.

If a family member is already paying for their own iCloud+ plan, they can choose to switch to your plan or keep their own and still remain part of the family. When they switch to the shared family plan, they get a refund for the remainder of their personal plan. They can't keep their current plan and use the shared family plan at the same time.

Rather than canceling, she should switch. See the following from the previous post:

If a family member is already paying for their own iCloud+ plan, they can choose to switch to your plan or keep their own and still remain part of the family. When they switch to the shared family plan, they get a refund for the remainder of their personal plan. They can't keep their current plan and use the shared family plan at the same time.