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Is It Better To Have A Lower Unit Rate Or Standing Charge?

Opting for an energy tariff featuring either a low unit rate or standing charge might appear advantageous. Typically, energy providers present a choice between the two, based on your preferences.

Whilst you may want to select the lower unit rate, the decision can be perplexing, as certain energy users might actually gain more from a tariff with a higher unit rate. This guide has been crafted to assist you in discerning when it is advisable to opt for a specific energy tariff, whether favoring a lower unit rate or a reduced standing charge.

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What Is A Standing Charge?

A standing charge is a fixed daily fee paid to your energy provider, covering the expenses associated with delivering gas and electricity to your residential or business premises. This charge remains consistent on your bill, irrespective of the quantity of energy consumed.

What Is A Unit Rate?

The unit rate represents the cost incurred for your gas and electricity consumption. To illustrate, your electricity usage is measured in kilowatt-hours (kWh), with rates established by the energy supplier, who charges you for each kWh consumed.

2023 Average Unit Rates for UK Residential Properties:

Electricity unit rate is 28.34p per kWh with a daily standing charge of 45.34p

Gas unit rate is 7.37p per kWh with a daily standing charge of 27.22p.

2023 Average Unit Rates for UK Commercial Entities:

Micro business – 18.84 pence per kWh

Small business – 18.89 pence per kWh

Medium-sized business – 17.72 pence per kWh

Large business – 17.44 pence per kWh

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Is It Better To Opt For A Lower Unit Rate Or a Standing Charge?

For residences and businesses with substantial gas and electricity consumption, opting for a lower unit rate paired with a higher standing charge can be advantageous. This choice should be made with your annual consumption data readily available to confirm its suitability for you. Although, if your energy usage is minimal, your home is frequently unoccupied, or you run a seasonal business, selecting a lower standing charge is more favourable. Certain energy suppliers even provide tariffs with no standing charges. Nevertheless, these tariffs typically come with significantly higher unit rates, making them cost-effective only for specific user profiles.

Design Elements

Overview Of The Pros And Cons Of Each Tariff

Reduced Unit Rates

This offers lower unit rates and is perfect for high consumption users +

However, you will incur a costly standing charge daily, irrespective of your energy usage –

Reduced/ No Standing Charge

You only pay for the gas and electricity you consume

The unit rate will be higher, hence it’s only suitable for low usage

How Can You Change Energy Providers?

Navigating the rising energy expenses can be challenging, prompting questions about whether and how to switch providers. In the context of switching energy in 2022 and beyond, the primary focus is on cost management to shield against potential price hikes. Amidst the uncertainty facing numerous UK households and businesses contemplating a switch, there still exist appealing energy tariffs in the market. Despite being pricier than the current Ofgem price cap, some households are choosing to transition to a fixed deal to preempt future cost escalations. Businesses, seeking stability and financial predictability for budgeting purposes, can explore competitive energy deals available. Explore the latest energy prices effortlessly within 60 seconds through Business Energy Comparison.

Start your journey and compare business gas and electricity rates with Business Energy Comparison today. Use our price comparison tool and in less time than it takes to make a brew, we’ll compile your best prices from the UK’ s best suppliers.

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