What is a standing charge? And do I have to pay it?
Reading an energy bill can be like trying to decipher hieroglyphics.
Balance, credit, tariffs, personal projections – bills are littered with complex jargon.
In this guide, we take a closer look at standing charges, and whether it’s worth you switching to a plan without them.
What are standing charges?
Your standing charge is a payment you make to your supplier to cover the fixed costs of supplying your household with gas and electricity.
Costs include meter readings, maintenance and keeping your home linked up to the energy network; some of the money is invested by the government in renewable energy or fuel poverty projects.
Both gas and electricity have their own individual standing charge.
Think of a standing charge as the energy equivalent of line rental. You pay it for access to the energy, and then pay for usage on top (calculated in unit rate).
Standing charges are often expressed as pence per day (p/day) on your bill.
What is a unit rate?
A unit rate is a price for each unit of electricity or gas you use and is shown on your bill in pence per kilowatt hours (p/kWh).
How much do standing charges cost?
Normally standing charges – which are paid at a flat rate – cost 15p-40p/day for gas and 10p-30p/day for electricity.
Does every energy tariff have a standing charge?
Yes, since the Retail Market Review every tariff is obliged to include a standing charge, to standardise bills across the market and make them easier to understand.
But this is somewhat misleading.
A supplier is perfectly entitled to set its standing charge at £0.
The amount a supplier sets will vary, so it’s always worth checking the price in the tariff’s small print when comparing energy deals online.
Should I switch to a tariff with £0 standing charges?
This all depends on a host of factors.
It’s all about working out how much energy you use.
Energy plans with paid standing charges are often cheaper than those without.
Typically, the higher the standing charge, the less you’ll have to pay per unit of energy.
Whilst £0 standing charges may look attractive in a company’s marketing, it may actually cost you more in the long run.
If you’re a very low energy user, a zero standing charge tariff could save you money.
Similarly, if you have a property that is uninhabited for a large part of the year – a garage which is separate to your home or a flat which is only used for a few weeks a year, for example – it’s worth having a look at tariffs with £0 standing charges.
Which suppliers offer plans with £0 standing charges?
To find a deal with £0 standing charges, compare prices using our free tool.
They’re not common; Utilita are well known for offering plans with £0 standing charges.
How do I pay my standing charge if I’m on a payment meter?
Your supplier should enable you to pay your standing charge from your meter.
Ovo PAYG customers, for example, can pay using their meter and the money will be still be taken even if you’re not actually using any gas or electricity.
You’ll see your balance fall by the same amount each day to cover the charge.
If you’re not sure how to pay your standing charges, speak to your provider.