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How Do Standing Charges Work On Business Energy Contracts?

As a business owner, one of your main concerns is keeping your operational costs low. While the standing charge tariff is definitely a factor to consider when looking at energy deals, it’s not all you have to think about, let Business Energy Comparison help!

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One of the first things most business owners want to know when looking for energy deals is what a standing charge is. You’ll also want to know whether or not it’s necessary to pay it. Depending on the supplier and the business energy needs, a standing charge tariff can be as little as 40p a day.

How your business energy bills work can seem complex and confusing. Our service makes it easier for you to figure out what your business needs and compare business energy suppliers. This guide will make sure that you’re well-informed and able to make the best choice with our help!

What Is An Energy Standing Charge?

Standing charges for businesses are a daily rate that businesses must pay to stay connected to the main energy grid. You pay your standing charge in addition to the unit rates for every kWh of gas and electricity that your business uses.

The business electricity standing charge is the amount you pay to keep electricity supplied to your business. You have to pay the standing charge regardless of how much energy you use.

Your standing charge can also increase if your energy usage increases. You’ll have to pay an increased standing charge for your entire contract if this happens.

The business gas standing charge is the same thing, but it covers the gas supply to your business. Standing charges will vary depending on your specific circumstances.

Most suppliers offer energy deals that require you to pay a standing charge. If you want to save money on your energy bills, the business energy contract you choose will play a large part. Choosing the right business energy deal can be the deciding factor in the standing charge tariff you’ll have to pay.

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It’s hard to pin down average standing charges for business energy because there are many variables to consider. The size of the business and where it’s located factor into the size of the energy bills.

This is why it’s important to know the size of your business before you sign a business energy contract. You don’t want to end up being charged more than is strictly necessary. Other factors that come into play are how and when the business uses its energy.

Are there different standing charge tariffs for business energy users than domestic customers?

Yes! Domestic customers and business energy users typically pay different standing charges. The main reasons for this are that the standing charge pays to maintain the supply to the business premises and infrastructure.

So, this can vary depending on energy consumption. Businesses may also pay additional government-mandated charges that relate to the reduction of carbon emissions.

How Do Standing Charges Work On Different Types Of Contracts?

The standing charge you have to pay will be applied differently, depending on the type of contract that you sign. Now, the contract that you need will be decided by your business size, business model, and energy needs. There are two types of business energy contracts that you’ll find:

Fixed contracts

A fixed contract is the best option for you if you want to know exactly what you’re paying for your energy bills each month. A fixed contract locks in your prices.

This means that your monthly bills won’t fluctuate according to the market prices. You’ll pay your agreed-upon fixed amount no matter what happens with the market.

There are pros and cons to this option. The biggest advantage is that your energy bills won’t increase without warning if the wholesale market price increases.

On the other end of this, you’ll still pay this price even if the market price has dropped significantly. Another disadvantage is that you’ll be paying higher unit rates on a fixed contract.

If you decide to switch to a different energy supplier, you might have to pay a termination fee. Make sure you read your contract and are happy with any termination fee before you sign on the dotted line.

Variable contracts

If your business’s energy consumption is quite high, then you might be better suited to a flexible or variable energy contract. With a variable contract, you aren’t locked in for as long as you would be with a fixed contract.

A variable contract lasts for 30 days, typically. This means that you have the flexibility to switch suppliers and get a better energy tariff at any time.

As we touched on with the fixed contracts, this contract doesn’t offer as much security. The energy company can increase your standing charge and unit rates if their costs increase.

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How much are the standing charges for business electricity?

The standing charge that a business pays for its electricity goes toward maintaining the national electricity grid. It also pays for the electricity supply to the business premises.

The prices from suppliers will be quite similar for the electricity for your business. This is because all business electricity deals in the UK currently come with a standing charge. The real determining factor will be what your business’s specific electricity requirements are.

We can give you a tailored business electricity quote in minutes.

How much are the standing charges for business gas?

The standing charge you’ll have to pay for business gas is dependent on a few factors:

  • How much gas is used
  • The length of the chosen contract
  • How many locations need to be supplied with electricity

These factors are business specific, so it’s difficult to generate accurate business energy quotes without certain details. You can get a tailored quote for your business and take the guesswork out of it.

Our tailored business energy quotes help you save money and compare business gas prices and electricity energy deals from the top energy suppliers for businesses in the country. We find the best fit for your business energy needs.

Final Thoughts

So at this stage, you will most likely have to pay a standing charge for your business energy use. This is mostly because there aren’t many companies that offer contracts with no standing charge as yet. That said, you can still spend a reasonable amount on your energy bills.

In certain instances where you can find a no-standing charge tariff contract, it might still not prove to be a cheaper option. It’s best to take your company’s specific needs into account and compare energy deals until you find the right one.

Have a look at our blog if you’re looking for more tips on saving on your energy deals and utility bills.

Frequently Asked Questions

Can you get energy deals without a standing charge?

The answer is yes and no. Standing charges haven’t been a requirement since 2016, so businesses can offer deals with no standing charges. More and more businesses are offering these deals, but there’s a catch.

You can’t currently get an electricity deal that comes without a standing charge, but you can get a deal for gas without a standing charge.

Most business energy suppliers will insist you pay a standing charge daily for commercial gas or electricity use. That said, there are business energy suppliers that claim they offer energy deals that don’t have standing charges.

The flip side of this is that their unit rates will typically be higher than ones you’d get paying the standing charge. This means that you’ll pay more for every unit that you use and could end up paying a lot more depending on your gas usage and electricity usage. This is especially true if your energy usage is quite high.

So, having no standing charge isn’t an indication that you’ll pay less overall. It’s a wiser financial decision to look for an energy supplier that offers a low-standing charge instead.

 

Can a no-standing charge tariff be an advantage?

Seasonal businesses will benefit the most from signing energy deals that don’t have standing charges. This is because you are required to pay your standing charge tariff even if there is no energy usage during that time.

So even if the business is closed for half the year, the daily stand charge tariff must be paid to keep the business connected to the grid. No standing charge tariffs can also benefit businesses that are open all year round but don’t use too much energy.

Why do energy suppliers have standing charges?

Standing charges cover the energy supplier’s own costs. These costs include meter readings, maintaining the energy network, connecting businesses to the energy network, and the costs of transporting gas and electricity, amongst other things. Depending on your supplier, the standing charge can also go towards offsetting the cost of managing your account.

Can I switch contracts to a no standing charge tariff contract?

It can be a little tricky to switch from one business energy deal to another. If you’re a micro-business, the supplier is legally obligated to inform you when your contract is ending. If you aren’t a microbusiness, this legal obligation doesn’t exist, and it’s up to you to remember when your contract ends.

This is important because the supplier might roll you over onto a new year-long contract with higher rates than before unless you switch. They can also charge you “out of contract” rates until you switch contracts or sign a new contract.

Typically, businesses have 49 to 60 days before their contract ends to make new arrangements. Of course, you can always just terminate your contract before it ends. But remember that you may be subject to paying a termination fee in that case.

What is considered a micro-business?

In energy terms, there are two ways to know if your business can be counted as a micro-business:

  • If your business employs less than 10 employees and has an annual turnover of less than £2 million.
  • If your business uses less than 100,000 kWh of electricity yearly or less than 293,000 kWh of gas per year.