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Standing Charges – What Are They & Do You Have To Pay Them?

Person Calculating Standing Charges On Energy Bills

Standing charges appear on most gas and electricity for both homes and businesses. However, many people are still unsure what they are and why the are paying them.

In this guide, Love Energy Savings answer common questions on standing charges and offer advice on whether switching to a no standing charge tariff could be right for you.

What is a standing charge?

A standing charge is automatically added to most gas and electricity bills. It’s a fixed daily amount that you are required to pay no matter how much energy you have used.

Essentially, this is a fee paid to your energy supplier for the service of supplying your property with gas and electricity.

The standing charge covers the costs incurred by your supplier including:

  • Carrying our meter readings
  • Keeping your property connected to the main gas and electricity supply
  • Payments for government initiatives including help for vulnerable households and C02 emission reductions

How do standing charges work?

Standing charges will be listed on your energy bill at a daily unit rate. Those on a dual fuel energy tariff will pay both a gas standing charge and an electricity standing charge.

Since the Retail Market Review, all tariffs are now structured with a clear unit rate and a standing charge. The aim of this was to simplify energy contracts and make it easier for consumers to compare tariffs and find the best energy deal for them.

How much do domestic standing charges cost?

Your daily standing charge will depend on your energy supplier. Typically, domestic standing charges range from:

  • 5p to 60p per day for electricity
  • 10p to 80p per day for gas

Over the course of a year, these charges can add up to a substantial sum running well into the hundreds of pounds.

What is the cost of business standing charges?

The cost of business standing charges will vary depending on your supplier, the size of your business and they type of business energy contract you are on.

Business standing charges can cost between:

  • 15p to 160p per day for electricity

If you are on a fixed price contract, standing charges may displayed on your business energy bill as either pence per day or pounds per month.

Do prepayment meters have standing charges?

Even if your property has a prepayment meter, you’ll still have to pay a standing charge for your energy supply. This can typically cost around 28p per day.

The standing charge has to be paid regardless of whether you use energy or not. If you don’t have any credit on your meter, you’ll be required to pay for the unsettled standing charges the next time you top-up.

Is there a price cap for standing charges?

There is no specific price cap to limit the the cost of your standing charges. However, if you're on a default tariff, you will still be protected by the Ofgem energy price cap

The price cap limits the amount a supplier can charge domestic customers on a default energy tariff, whether they pay by direct debit, standard credit, or a prepayment meter.

This covers the full cost of your energy tariff, including your unit rate and your standing charges. 

Are there any energy tariffs without a standing charge?

Yes. There are a few energy suppliers who offer no standing charge tariffs or set a rate of £0 on your bill. However, you should be aware that your unit rates can increase with a no standing charge tariff.

A tariff without standing charges is often most suited to customers with low energy usage or those who use energy infrequently.

For example, if you run a seasonal business or one which is only open a few days a week, a no standing charge tariff could reduce your bills. When you business is closed and you don't use energy, you won't face any bills.

If you're a domestic customer who owns a holiday home, a no standing charge tariff could be ideal. As you will only be charged for the energy you use, you can save money when the property is not in use.

Find the right tariff for you with Love Energy Savings

At Love Energy Savings, we work with a wide range of suppliers to bring you the best possible choice when it comes to finding the right gas and electricity deal for you.

When you compare energy prices with us, you can quickly view the estimated yearly cost of your tariff. You can then identify whether a no standing charge tariff could help you reduce your bills.

To find out how much you can save with Love Energy Savings, simply complete our quick online energy comparison calculator.

For more tips and advice on finding the best energy deals from the experts at Love Energy Savings, take a look at the rest of our business and household energy guides.

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