Tom Melhuish 7 min read

Business energy standing charges | All you need to know

When you look at your business energy bill, you’ll notice an additional fee charged in pence per day called a “standing charge”. Standing charges essentially cover the cost of maintaining the connection of your property to the electricity and gas networks.

Standing charges are fixed charges that you pay on a daily basis for using the supply line. This guide sets out a standing charge, explores whether a “no standing charge” business energy tariff is worth it, and answers your frequently asked questions.

What is a business energy standing charge?

A standing charge is a daily charge added to business energy and electricity bills. You pay a fixed charge as a business, no matter how much or little energy you use.

The standing charge will cover the cost of maintaining the pipes and wires that connect your property to the national grid.

How much do standing charges cost?

Standing charges can range from 20p-80p per day for business gas to 5p-50p per day for business electricity. There is the option with some energy suppliers to have a “no standing charge” tariff, but a significantly higher unit rate usually offsets this saving.

Please note that standing charges are levied per business energy meter. A standing charge will be applied to each meter if your business has multiple meters or properties.

We recommend speaking to a business energy broker to discuss the current standing charges and how they compare to your existing contract.

Why do I have to pay a standing charge?

You have to pay a standing charge to cover the costs of maintaining your energy supply. Energy suppliers typically use standing charges on your business gas and electricity to cover the following:

Conducting meter readings.
Maintaining the energy network (pipes and wires).
Connecting your premises to the energy network.

Do I pay a standing charge on a smart meter?

Yes, you pay a standing charge on a smart meter unless you’ve agreed on a no standing charge business energy tariff with your business energy supplier.

The standing charge on a smart meter is added to the tariff like any other meter, and you’ll be charged daily for both electricity and gas.

Do I pay a standing charge on a prepayment meter?

Yes, you pay a standing charge on a prepayment meter. The standing charge covers the usage of the energy network in supplying your premises with both gas and electricity.

What are the benefits of having a business energy tariff with no standing charges?

Here are a few benefits you will receive from having an energy supplier with no standing charge:

You only pay for what you use.
It’s perfect for a micro business/part-time office – where the business premises are not always used.

Is it better to have a lower unit rate or no standing charge?

This is entirely dependent on your expected business energy usage. But nine times out of ten, having a lower unit rate and paying a daily standing charge is preferable.

You will pay a lower unit rate per kWh by paying a fixed amount for your standing charge. This means you’ll likely save more by having a fixed standing charge on your business gas rates and business electricity prices.

To make an informed decision, review your daily energy consumption and calculate the costs of a no standing charge tariff vs the tariff with a standing charge.

What are the disadvantages of no standing charges?

A no standing charge tariff can sound great but comes with a few negatives:

Very few suppliers offer this, so you have a limited pool of suppliers.
It can end up costing your business a considerable amount more. The unit rates are increased to cover what they’d usually receive in standing charges.

It’s worth thinking about the advantages and disadvantages in detail before you make your decision; if you need expert advice, feel free to reach out to our energy experts to ensure you’re making the right decision for your business.