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!
How Do Standing Charges Work On Business Energy Contracts?
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
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.
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.
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.
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.
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.
Business Energy Comparison
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