Guide To Energy Standing Charges

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    If you’ve checked your energy bill and noticed a standing charge but are unsure what it is, you’re in the right place and you’re not alone. A lot of people frequently ask why there’s a standing charge, what it means and whether you have to pay it.

    How much are energy standing charges?

    Your daily standing charge, determined by your energy supplier and location, can accumulate to a significant yearly sum.

    There’s a cap on energy prices which limits what suppliers can charge for unit rates and standing charges for default tariffs and prepayment meters.

    Between January and March 2024, average standing charges for default tariff customers will be capped at 53.34p per day for electricity and 29.60p per day for gas.

    From April to June 2024, Ofgem’s new energy price cap sets standing charges at 60.10p per day for electricity and 31.43p per day for gas. Despite this, overall energy prices are expected to decrease from £1,928 to £1,690 annually.

    Standing charges can vary by region, so it’s wise to check with your supplier for your specific rate, which may differ from the average and could be higher.

    How are standing charges calculated?

    The standing charge isn’t randomly chosen; it’s calculated to cover several expenses:

    • Maintaining the energy network’s infrastructure across the UK
    • The expense of meter readings
    • Investments in renewable energy
    • Government initiatives aiding vulnerable households

    Your energy provider determines the daily rate considering factors like your location, tariff, and their need for profit. While energy suppliers have the freedom to set charges, Ofgem regulates to keep them reasonable.

    Are there energy suppliers who don’t have a standing charge?

    Only a few energy suppliers provide tariffs without a standing charge or bill you at a rate of £0.

    Since options for zero standing charge deals are rare, it’s advisable to compare tariffs with standing charges against those without them. This ensures you’re the better choice and getting the most value for your money throughout the year.

    If the standing charge in your area is low, opting for a tariff with a charge is probably more economical, unless your property is frequently unoccupied.

    Do all energy suppliers have a standing charge?

    Some energy suppliers choose not to add standing charge to your monthly or yearly payments; however, this isn’t very common. You may be thinking, ‘Why don’t I switch to avoid the standing charge?’. It makes sense to only pay for the energy you use without having to cover supply and maintenance fees too, right? Not necessarily.

    For suppliers that don’t impose a standing charge, their electricity and gas costs are generally more expensive per unit. Therefore, don’t be fooled into thinking that you can automatically save money on energy bills by not paying the daily unit rate. It’s likely that your bills will end up costing the same.

    Switching to a tariff that doesn’t have a standing charge could be beneficial for people who own holiday homes or rent out business premises for a couple of months a year. These kinds of properties that may lie empty for a long time will only use a small amount of energy, so it’s likely that you won’t mind paying a little more per unit.

    When they’re empty, no energy is used and therefore you don’t pay for it. If these properties were on a tariff that did have a standing charge, you could pay up to £190 per year despite not using any energy. This is because you’re paying for the building to have a supply, even if it isn’t utilised.

    For houses or businesses that require gas and electricity all year round, you wouldn’t save money by not paying the standing charge, so it’s best to continue to do so. You’re likely to find more competitive rates with suppliers that do ask for this fee. Our energy experts can help find the best business electricity rates and a supplier that is suitable for your needs.

    What are the advantages of a tariff with zero standing charges? 

    Energy tariffs without standing charges can save you money because:

    • You only pay for the energy you use.
    • You can reduce your bills if your property is frequently empty, such as a second home.

    Tariffs without standing charges are attractive, especially for properties like holiday homes that aren’t in constant use. You only pay for the energy you use, which can be beneficial in such situations. However, these tariffs often have higher energy unit prices.

    To find the most cost-effective tariff, consider your typical monthly energy usage. For many households and businesses, especially those with medium to high consumption, a tariff with a low standing charge is likely more advantageous than one without any standing charge.

    Although the standing charge seems small, it’s essential in the energy system. Understanding its calculation and impact on your overall costs helps you choose the best tariff.

    Ultimately, the standing charge ensures reliable energy supply when needed.

    Is there a standing charge for pre-payment meters?

    Yes, standing charges apply to prepayment energy tariffs, where you pay upfront by adding credit to your meter.

    Even if your meter has no credit, you’re still liable for these charges. So, when you top up next, you’ll need to cover the standing charges owed. This is important to note, especially if you don’t use gas during the summer when heating is off.

    Is there a standing charge for smart meters?

    Smart meters, if you’re offered one, should be provided for free by your energy supplier. Having a smart meter will not increase the standing charge on your bill.

    Your smart meter tells you how much gas and electricity you use in almost real time. So, for instance, if you turn the kettle on, the smart meter will show a temporary increase in the amount of electricity you’re using. Once the kettle’s boiled, the usage will come back down.

    The meter will automatically factor in the standing charge cost. This means that the figure reflected on the screen will be the price per kwh and the daily unit rate. This is why, even if you weren’t to use any electricity all day, your meter might still note that you’ve spent a certain amount.

    For example, if the daily standing charge is 30p and you don’t use any electricity, after 10 hours the smart meter might show that you’ve spent £3. You’re continuing to pay to be connected to the energy supply network even if you use nothing.

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    Let’s save time, can we automatically gather meter information?

    ? What does this mean?
    To get your quotes at lightening speed we need several key pieces of information which can all be found on your electricity bill. But by simply ticking this box, we can search ‘industry held data’ to get your meter number, electricity consumption and current energy supplier. This means that we can get you quick quotes without asking you to dig out all of your paperwork. This is personal data therefore we need you to allow us to access this information.
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    Do you know your electric meter number?

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