According to many energy brokers, the issue of the “standing charge” is nearly always raised when a business owner is evaluating potential new suppliers and tariffs. Standing charges can be as little as 40p a day and as much as £2.90 for some small businesses and, understandably, many entrepreneurs focus on getting this cost down as far as possible in an attempt to save money over the term of their energy contract.
The general complexity of how your business’s gas and electricity bills are worked out is difficult for many company owners to understand. Even more complex is, when the time comes to switch, choosing a supplier and a tariff that will reduce your company’s energy cost to an absolute minimum.
The level of the standing charge in any potential contract you sign is not the full story however. There are other factors you need to consider even as some suppliers are starting to make the first few tentative steps towards offering deals to businesses with no daily standing charge at all.
On this page, we’ll be showing you:
- what no standing charge tariffs are currently on offer
- what a standing charge is and why suppliers make this charge
- how standing charges are shown on your bill
- whether you really need to pay a standing charge
- the advantages and disadvantages of a no standing charge tariff
- how easy it is to switch to a no standing charge tariff
- how to decide whether choosing a no standing charge tariff is right for you.
If you’d like 3-4 quotes from energy companies offering the cheapest prices and most favourable terms, please leave your details at the top of the page. We’ll get back in touch with you to find out more about you and your company. Our service is free and there’s no obligation on you to take up any offer we find from a supplier on your behalf.
No standing charge tariffs – what’s currently available
At time of writing, we could only find nine no standing charge tariffs available – four to businesses and five to homeowners. Of the business tariffs, two were tariffs which apply when a business moves into a new premises but when that business has not yet started using any gas or electricity.
Please bear in mind that this changes all the time – more and more suppliers are quietly testing no standing charge tariffs to assess whether they are profitable or not and, if they are, to determine what unit rates they should set per gas or electricity unit consumed to be competitive.
|Product Name||Target customers||More information|
|Utilita no standing charge tariff||Landlords, social housing, and letting agents||Specifically designed to help buy-to-let and holiday cottage landlords during void periods|
|E.ON no standing charge tariff||General businesses||Available to businesses which have taken over a property but which is not using gas or electricity|
|SSE no standing charge tariff||Households||Available to businesses which have taken over a property but which is not using gas or electricity|
|nPower no standing charge tariff||Households||Two different energy rates charged instead of standing charge – higher rate for first units used during month followed by lower rates “to cover the fixed costs we have to pay to supply electricity or gas to you|
“Robin Hood Energy” began to offer a no standing tariff to its clients in 2016 although heavily modified its offering in 2018 following the introduction of OFGEM’s price cap. Robin Hood Energy, a commercial venture of councils based in and around Nottingham, was a not-for-profit supplier which received its energy from Ebico. However both hit financial problems during the pandemic and the customers of both were sold to British Gas in September 2020.
What is a standing charge?
A standing charge is a daily fee that you pay to your utility supplier or suppliers for the delivery of gas and electricity to your business premises or home.
In addition to the standing charge, you also pay a unit rate for every kWh of gas and electricity you use.
Why do energy suppliers have a standing charge?
The reason for the existence of a standing charge is to meet your utility suppliers’ expenses in the maintenance of their network, the cost of carrying out meter readings, the cost of being connected to the energy network, the cost of transporting the gas or electricity through those networks, and so on.
A proportion of your standing charge also is allocated to government-sponsored and -legislated schemes to reduce carbon emissions and to protect households in danger of falling into fuel poverty.
Sometimes, the standing charge will be used by your supplier to offset some of the costs of managing your account. If this is true of your current supplier, this offers you an opportunity to save money. By paying your bill by direct debit as often as possible, their administration and financial transaction charges are reduced – many suppliers incentivise you to do this by offering a lower daily standing charge for paying this way.
Prior to an enquiry by the Competition and Markets Authority in 2016, every supplier included a standing charge on each of the tariffs they offered to businesses and consumers as a result of the Retail Market Review. The idea behind this was to make the pricing structures between companies more uniform making comparisons easier.
This requirement was eventually dropped but, to date, only a few suppliers have launched no standing charge tariffs and most launches have been quite low key as they decide whether this is a market they wish to be in or not.
How are standing charges shown on my bills?
On your bill, your daily standing charge will be shown as units of daily usage.
What is a no standing charge tariff?
A no standing charge tariff is an agreement you enter with a gas supplier or electricity supplier in which there is no daily standing charge payable by you.
You will still likely see a daily standing charge entry on your bill from your supplier however it will be zeroed out in the figures column (that is, it will be shown as “£0”).
Do I really have to pay a standing charge for my business energy?
Unless you have signed up to either a gas or electricity supplier which has offered you a no standing charge tariff, you will pay a standing charge at the rate agreed in your contract.
What are the advantages of a no standing charge tariff?
No standing charge tariffs may offer advantages to:
- landlords who regularly experience or who are experiencing a void – that is, no-one is renting their commercial or residential premises from them at the time
- seasonal businesses which only trade for certain months of the year – for example, holiday parks with permanent bungalows and dwellings plugged into the energy supply network.
If a property intended for rental is empty and not using any gas or electricity during that time, landlords on a tariff with a standing charge will be responsible for payment.
Likewise, a seasonal business which is shut for six months of the year may benefit from not having to pay a daily standing charge. The same is true for a holiday home which may be only rented out during the summers and at Christmas.
For landlords of buildings with multiple units (whether residential or commercial), the cost per unit of electricity or gas falls once a certain amount has been consumed during a twelve month period. This could provide a financial advantage to you if each unit in your property is supplied from the same electricity or gas meter.
No standing charge tariffs may also be of benefit to businesses which are open the whole year round but whose gas and/or electricity usage is minimal. At time of writing, there is no standing charge-free tariff offered by any of the suppliers catering for this target market.
What are the disadvantages of a no standing charge tariff?
No standing charge tariffs feature a much higher unit rate than tariffs with standing charges – in other words, each kWh of energy you consume costs you more.
Although, on the few tariffs that are available, a price break may be available once a certain level of consumption has been reached, your actual usage on a no standing charge tariff may mean that you’d pay more than you would on an alternative tariff which features a standing charge.
Is it easy to switch to a no standing charge tariff?
Unlike residential energy contracts, business energy contracts are a lot harder to switch away from. Unless you’re classified as a microbusiness, your supplier is under no legal obligation to inform you of the end date of your existing contract so it’s particularly important that you remember it.
The reason why it’s important is that, depending on the terms and conditions of your contract, you may be rolled over onto a new contract for 12 month on higher rates than the one you’ve agreed to or you may be charged much higher “out of contract” or “deemed” rates until you switch.
You normally have between 49 and 60 days before the end of your existing contract to make alternative arrangements. While it is possible to unilaterally leave many business energy supply contracts before the end of term, you may be subject to a significant financial penalty if you choose to do so.
Deciding when a no standing charge tariff is right for your business
Although a rule of thumb, the less the amount of gas or electricity you use on a standard energy contract, the higher the proportion of your bill will be for daily standing charges. In these cases, there may be a strong economic argument to switch to a no standing charge tariff.
However, without knowing exactly how much gas and electricity you’re likely to use in the coming twelve months, there is an element of guesswork involved. If you use more gas or electricity than you bargained for on a no standing charge tariff, you will likely pay more for your supply than on a tariff with a daily standing charge.
With dozens of suppliers offering thousands of business gas and electricity tariffs, it’s a complicated task to find the very best deal for your business supply based upon the price you pay and the length of commitment you have to offer.
If you fill in the form at the page, our energy experts will get to know you and your business. We’ll develop an understanding of your likely energy use both in terms of volume and timing. We’ll then present you with 3-4 quotes from our panel of registered suppliers – the quotes which we believe represent the very best value for money.
Our service is free and there’s no obligation to accept any of the offers we pass onto you.