Energy Bill Form

December 6, 2023

Understanding Your Energy Bill: Standing Charges

Is your standing charge a moral hazard and why might they be removed in the near future?

Your energy bill can be confusing, but it doesn’t have to be. Knowing exactly what the charges are, and what you can do about them, could help you save overall.

What is a Standing Charge?

A standing charge is simply the fixed daily amount your energy supplier charges you for having access to energy – you can think of it as a service fee, like a line rental for your phone.

The fee covers the costs your energy supplier takes on to give you access to gas and electricity. This means you will pay the fixed standing charge no matter how much energy you use, even if the property is vacant.

If you have a dual fuel energy bill, you’ll pay both a gas and an electricity standing charge.

What Does My Standing Charge Cover?

The standing charge rate covers the costs the provider incurs by supplying your gas or electricity, this can include:

Maintenance: The cost to use and maintain energy networks, including the pipes and wires that carry energy around the UK.

Connectivity: Any losses that they incur in connecting your supply.

Meter Reading: They may be required to send engineers out to record meter readings on occasion, these costs are included in your standing charge.

Government Incentives: To help reduce CO2 emissions, and invest in renewable energy sources.

How is the Standing Charge Calculated?

Standing charges vary depending on your energy provider, your tariff, how you pay your bill, and from region to region. The fee is also calculated depending on population needs and how easy it is to supply to the area.

Standing charges are impacted by the UK energy market, and are driven up by the high wholesale energy prices.

What are the Cheapest Standing Charges?

Between January and March 2024, Ofgem’s price cap meant the average standing tariff was capped at 53.34p per day for electricity and 29.60p per day for gas, excluding VAT. These rates may vary depending on the region.

From April 1, 2024, Ofgem’s new price cap will come into effect meaning changes to standing charges for electricity and gas. The new rates will rise to 60.10p per day for electricity and 31.43p per day for gas. However, despite the rise in standing charges, the price cap is expected to bring the average energy bill down.

Can I Avoid a Standing Charge?

No, unfortunately, it is not typically a charge you can avoid paying, they are a legal requirement as part of your contract.

However, there are exceptions and ways around it in some cases, including:

£0 Standing Charge Tariffs: There are a few energy providers who offer tariffs with £0 standing charge but these can be difficult to come by and may have higher energy costs.

Vacant Buildings: If your building is vacant for some time, for example, scheduled shutdowns, you could negotiate with your supplier over the standing charge during this period or potentially pause it.

Could Standing Charges be Removed?

While some leading industry experts have called for standing charges to be removed, including Money Saving Expert Martin Lewis. However, Ofgem states if it were to be removed then suppliers would still need to cover the costs like maintenance in other ways. It could mean that the cost of energy you use would go up for all.

Back to the blog
By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.