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What Is The Standing Charge On Energy Bills?
If you’ve ever looked closely at your energy bills, you might have noticed an extra charge. This is called a standing charge and adds to your overall bill.
You might be wondering what a standing charge is and why you need to pay it. This guide will discuss everything you need to know about these charges.
What’s A Standing Charge?
Put simply, electricity standing charges cover the costs incurred by the energy supplier when they provide you with access to energy. It operates similarly to phone line rental, as you pay to use the line that connects you to other callers.
This means that you will still need to pay a standing charge regardless of how much energy you use. Standing charges are applied to gas and electricity bills and you will usually be charged at a flat daily rate.
The prices of standing charges have varied recently due to the implementation of the Energy Price Guarantee. This is set to last until April 2023.
How Much Do I Have To Pay For A Standing Charge?
As mentioned above, standing charges can vary depending on your region and supplier, but there is a general price range.
Electricity standing charges generally range from 10p to 80p per day. The average electricity standing charge sits at around 46p per day. Gas standing charges range from 5p to 60p per day, with the average gas standing charge set at around 28p per day.
Based on this average, consumers will pay around £263 per year if they use both gas and electricity. This is slightly steep when you consider that these costs are applied before your energy usage is added to your energy bill.
Why Do I Need To Pay Standing Charges?
Energy suppliers don’t charge customers standing charges to make a profit. There are various other costs that they incur when supplying energy.
Standing charge costs are usually used to cover the costs, including:
- Meter readings.
- Getting your home connected to the energy network.
- Maintenance of wires, energy networks, and pipes that transport both gas and electricity to your residence.
Standing charges have been used recently to cover administrative costs. These costs come from moving customers to new energy suppliers after their original companies failed.
Standing charges normally increase by £75 per year. Research has determined that £68 of this fee goes towards the administrative costs mentioned above.
Do I Pay A Standing Charge With A Prepayment Meter?
If you have a prepayment meter, you will be liable to pay prepayment energy tariffs. These include daily standing charges for gas and electricity.
The standing charges that come with a prepayment meter are generally higher than normal standing charges. Installing, maintaining, and reading meters costs the supplier more money, which they pass on to consumers.
If you do not load any credit onto your prepayment meter, then your daily standing charges will continue to accumulate over time. You should be aware of this if you have more than one property and make use of a prepayment meter.
Prepayment customers pay roughly 50p for their daily standing charge for electricity. They must pay 37p for their gas standing charge; but this can vary depending on your region and chosen supplier.
Is There A Standing Charge For Smart Meters?
If the energy supplier that you have a contract with charges for standing charges, then you will still be liable to pay them, even if you have a smart meter.
If you have a smart meter, your standing charges will be included in the total bill that shows up on your meter, which also tells you how much energy you have used. This means that even if you don’t use any energy, this number will still increase due to the standing charges you will incur.
There are still some benefits to having a smart meter, however. Standing charges on smart meters are lower, as smart meters help reduce the costs of the energy supplier.
Are There Energy Suppliers Who Don’t Have A Standing Charge?
Before 2016 tariffs needed to have a standing charge, but this has since changed. Now, suppliers do not need to task their consumers with paying for standing charges.
Unfortunately, the vast majority of suppliers still do apply a standing charge to their tariffs due to the fact that it helps them cover the costs of the services we have mentioned above, so it is often difficult to find energy deals like this.
The few suppliers that offer a zero standing charge tariff are E.ON, Utilita, and Ebico.
Some energy providers are more flexible with how they impose standing charges. E.ON, for example, won’t impose a standing charge if you don’t use energy in a house that you’ve recently become responsible for, such as if you inherited it. You will then only need to pay a standing charge if you begin using energy on the property.
What Are The Advantages Of A Tariff With Zero Standing Charges?
If you have more than one home and use very little energy at one of your homes while it stands empty, then you may benefit from a zero standing charge tariff. This is because you will not have to pay for gas and electricity that you do not use.
A zero standing charge tariff also makes it much easier to compare the costs of suppliers, as you will only have to factor in the cost of energy instead of adding a standing charge to that cost as well.
What Are The Disadvantages Of A Tariff With Zero Standing Charges?
If your household uses a lot of energy, then a zero standing charge tariff might not be the best solution for you if you are trying to save money.
If your supplier does not impose standing charges on you, then you will need to pay more for each unit of energy you use. These suppliers still need to make a profit at the end of the day.
Therefore, a flat daily standing charge can be easier to contend with than a much more exorbitant energy bill due to high usage.
Final Thoughts
Global energy prices are soaring at the moment. But, thankfully, the government has provided consumers and businesses with many schemes to offer them some relief.
However, if you are paying too much in standing charges or unit rates, compare business gas and electricity tariffs with us at Business Energy Comparison. We can provide you with free quotes from the best energy providers in minutes.
Frequently Asked Questions
Why are standing charges increasing?
Standing charges increase on a yearly basis due to the fact that there are many administrative costs that come into play when customers need to move from an energy supplier that has gone bust.
While this may not seem like a common occurrence, it is, which is why standing charges are increased in order to absorb these costs.
Which region has the lowest standing charge?
London is the region with the cheapest standing charges at around 30p per day. The reason for this is that gas and electricity do not need to be transported all that far to get to the households of consumers.
What is the maximum standing charge for electricity?
The maximum standing charge for electricity is 80p per day.
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