The vast majority of gas and electricity bills include what’s known as a standing charge. Here, we explain what standing charges are, how they work and when it makes sense to look for an energy tariff without one.
What is a standing charge?
A standing charge is a fixed daily cost that’s automatically added to your energy bills. It works in much the same way as your broadband line rental costs and must be paid regardless of how much energy you use.
You’ll normally pay standing charges if you have a:
post-pay energy meter
prepayment energy meter
Economy 7 or Economy 10 energy meter
What does the standing charge cover?
The standing charge is a fee paid to your supplier to cover the cost of supplying your property with gas and electricity. More specifically though, it covers the following:
the cost of physically supplying gas and electricity to your home
keeping your home connected to the energy network
having your gas and electricity meters read by your energy company
energy network maintenance
government initiatives aimed at helping vulnerable homes
government initiatives to reduce carbon emissions
A standing charge applies to both gas and electricity. If you have a dual fuel tariff (where your gas and electricity comes from the same supplier), you’ll pay both a gas standing charge and an electricity standing charge. These will be listed on your energy bill as a daily unit rate.
How much do standing charges cost?
The cost of standing charges depends on the supplier and where you live, but you can expect to pay anywhere between 10p and 80p a day for gas, and 5p to 60p per day for electricity. This can quickly add up to a few hundred pounds a year at the top rates.
What is a no standing charge energy tariff?
Some energy tariffs offer very low standing charges, and a few include no standing charge at all. These are known as no standing charge tariffs or zero standing charge tariffs and they can be beneficial to some energy users.
Why might I choose a no standing charge tariff?
You might want to consider a no standing charge electricity or gas tariff if you’re away from home for several months of the year or if you have a second home that is empty on a regular basis.
Because standing charges apply even when you’re not using energy, if your home is often unoccupied, it’s likely you’ll be overpaying on your energy bill. A no standing charge energy tariff can therefore work out to be more cost-effective.
What are the advantages of a no standing charge tariff?
The biggest advantage to a zero standing charge energy tariff is that you’ll only have to pay for the energy you use – in other words, you won’t be charged during those times you’re not using any gas or electricity in your property.
Another benefit is that you will often find the unit cost reduces after a set amount of gas and electricity has been used. This can be useful if you have several properties on the one gas or electricity meter.
Are there any disadvantages?
The main disadvantage to a no standing charge energy tariff is that you’re likely to be charged a higher unit price for your gas and electricity.
This could result in you paying more overall each month when compared to a tariff that includes a standing charge, particularly if your energy use is medium-to-high over the course of a year.
You’ll also find your choice of supplier and plan type will be a lot more limited with a no standing charge tariff.
How do I find a no standing charge energy tariff?
Only a handful of suppliers, including offer no standing charge energy tariffs. You’ll need to compare your options carefully via an online comparison service.
Because the choice of deals is more limited, it’s worth comparing both the cost of energy tariffs with a standing charge and the cost of those without to ensure you’re getting the cheapest deal over the course of a year.
Bear in mind that your standing charge will vary depending on where you live so if yours is relatively low, there’s a greater chance that a tariff with a standing charge will work out to be the cheaper deal.
Can I get a no standing charge tariff if I have a prepayment meter?
Standing charges also apply to prepayment energy tariffs – where you pay for your energy in advance by topping up your meter with credit.
These charges still apply even if you don’t have any credit on your meter, which means that when you next top up, the money will be put towards paying the standing charges owed rather than your energy requirements.
Standing charges for those with a prepayment meter are usually around 28p per day but again, this varies depending on the supplier and your location. While it’s not impossible to find a no standing charge prepayment energy tariff, they are certainly not common.
Prepayment tariffs are not as competitive as those where you pay in arrears, so if you have a prepayment tariff, you may want to ask your supplier to see whether you can switch to a credit meter instead.
Your chances of being able to switch will be higher if you have a good credit rating and are not in debt with your supplier. If you are able to make the switch, a new meter will be installed in the property and you will then be able to switch tariffs – potentially to one without a standing charge.
Do smart meters have a standing charge?
Yes, standing charges are applied to smart meters. But they are likely to be lower than the ones you’d be asked to pay on a standard meter because the supplier needs to do less in terms of administration (such as carrying out physical meter readings).
Look for the total on the meter’s home display, it’s where the standing charge is likely to be included.
The amount displayed, including the standing charge, can account for why you’ve been billed a small sum on a day when you thought you hadn’t actually used any energy.
What’s better, a cheaper standing charge or unit rate?
It all depends on your circumstances and usage. A lower standing charge tends to be coupled with a higher unit rate. Generally speaking, this scenario tends to benefit a consumer with low usage. By contrast, a high usage consumer would be favoured by the reverse. It’s a case of establishing the cross-over point and seeing which side of it you fall.
Is there a cap on standing charges?
The price cap imposed by the regulator, Ofgem, is essentially backstop protection against excessive energy price rises. It applies for users on default energy tariffs, whether these are paid by direct debit, standard credit, or via a pre-payment meter. The price cap limits the rates a supplier can charge for their default tariffs, including, the standing charge.
Are zero standing charges available for business tariffs?
Zero standing charge tariffs can suit businesses which operate either seasonally, or trade only infrequently. These tariffs are offered by various energy suppliers including some of the UK’s largest. As always, it’s a balancing act and before going down this route, a business owner should do his or her sums. Take into account the higher unit rate that’s likely to be offered and see if the option can still deliver a cheaper energy bill overall.