Guide to energy standing charges
Take a look at your energy bill and you’ll notice that, as well as your gas and electricity use, there’s a ‘standing charge’. But what exactly is a standing charge? And why should you pay it? We have the answers.
Take a look at your energy bill and you’ll notice that, as well as your gas and electricity use, there’s a ‘standing charge’. But what exactly is a standing charge? And why should you pay it? We have the answers.
What’s a standing charge?
A standing charge is a fixed daily amount you have to pay for energy, no matter how much you use. It even applies to properties that are empty for part of the year – a holiday home, for example. It’s added to most gas and electricity bills.
The charge covers the costs your energy supplier takes on in order to get you your gas and electricity. Think of it like a line rental, but for your energy rather than your phone. How suppliers set standing charges alongside the unit rate are commercial decisions. The charge varies from region to region to factor in the complexity of infrastructure needed to get power to your area and local population needs.
Standing-charge costs include:
- Using and maintaining the energy networks, wires and pipes that carry gas and electricity across the country to your home
- Keeping your home connected to the energy network
- Carrying out meter readings
- Payments towards government initiatives that help vulnerable households and reduce CO2 emissions.
If you have a dual fuel energy bill, you’ll pay both a gas standing charge and an electricity standing charge. These are listed on your energy bill at a daily rate.
How much do I have to pay for a standing charge?
The daily standing charge depends on your energy supplier and where you live. Over the course of a year, it can add up to quite a large amount.
There is an energy price cap, which limits the unit rate and standing charge a supplier can charge if you’re on a default tariff, including standard variable tariffs, or have a prepayment meter.
Between October and December 2023, average standing charges for customers on default tariffs will be capped in line with the levels set by Ofgem in their price cap, at 53.37p per day for electricity and 29.62p per day for gas, excluding VAT, for a typical dual fuel customer paying by Direct Debit.
Standing charges vary from region to region, so yours may differ slightly from and even be higher than the average. Check with your supplier to see your rate.
Do I pay a standing charge with a prepayment meter?
Yes, standing charges are also included with prepayment energy tariffs – where you pay for your energy in advance by topping up your meter with credit.
These charges must still be paid even if you don’t have any credit on your meter. So, when you next top up, you’ll have to pay back all the standing charges you owe. This is something you need to watch out for if you don’t use any gas in summer when the heating is off.
Is there a standing charge for smart meters?
There is indeed. You’ll still pay a standing charge if you have a smart meter, but it’s often lower than you’d be charged with a standard meter as there’s less admin involved for suppliers.
The standing charge will usually be included in the total you see on your in-home display showing you how much energy you’ve used daily, weekly and monthly. That’s why you’ll sometimes see you’ve been charged a small amount even if you’ve been away from home or haven’t used any gas all day.
Are there energy suppliers who don’t have a standing charge?
There are very few energy suppliers that offer tariffs without a standing charge or who set a rate of £0 on your bill.
Because the choice of zero standing charge deals is limited, it’s worth regularly checking energy tariffs with a standing charge against those without, to make sure you’re getting the best value for money over the course of a year.
If the standing charge is relatively low where you live, it’s likely that you’ll be better off overall with a tariff that does have a charge unless your property is empty a lot of the time.
What are the advantages of a tariff with zero standing charges?
Energy tariffs without standing charges can be cost-effective for some people because:
- You only pay for the energy you use
- You can save on your bills if you have a property that’s left empty regularly, like a second home.
Top tipIf you’ve bought a home that you haven’t yet moved into, contact your energy supplier to tell them that the property is unoccupied and no energy is being used. You may be able to get the standing charge removed. |
What are the disadvantages of a tariff with zero standing charges?
Energy deals without standing charges probably won’t be right for most households. That’s because:
- The unit rates for gas and electricity are typically higher
- Medium to high energy users may end up paying more for their energy.
