What is a standing charge and can I avoid paying it?
Standing charges apply to most household energy bills and they can soon add up, but what are they for? We explain exactly what a standing charge is, what it covers and if there’s any way you can avoid paying it.
What is a standing charge?
Standing charges cover the cost of supplying your home with energy. The amount is charged daily and is fixed no matter how much energy you use.
Standing charges apply to both gas and electricity.
It’s worth knowing that you’ll be charged even if you don’t use any gas and electricity (remember, the cost covers supply not usage).
Standing charges pay for:
- Developing, using and maintaining the energy network (for example, the pipes and other infrastructure).
- Keeping your property connected to an energy supply.
- Carrying out meter readings.
- Government initiatives including the Warm Home Discount, as well as green levies to help lower carbon emissions.
How much is a standing charge?
Standing charges vary and are affected by where you live and how populated your area is. Broadly, the more people that live in your region, the more people there are to share the cost of supplying energy. Unfortunately, if you live somewhere rural or with a low population density, it could mean you pay a higher standing charge.
Generally, standing charges range from between 10p and 80p for gas and 5p and 60p for electricity (per day). On your energy bill, the standing charge usually appears as a ‘daily unit rate’.
Can standing charges increase?
Yes, standing charges can increase if costs to your supplier also rise. For example, if the cost of maintaining the energy network increases.
Standing charges have also increased in recent years to cover the administrative cost of switching customers to new providers, after some energy firms collapsed.
Energy regulator Ofgem, also caps the standing charge for standard variable tariffs (also known as default tariffs). Currently, the maximum standing charge is 53p per day for electricity and 30p per day for gas.
Do you have standing charges with a prepayment meter?
Yes, you’ll still pay a standing charge with a prepayment meter, the amount is taken when you top up.
Even if you don’t use energy for a while and haven’t topped up your credit (for example, gas for heating in the summer) your standing charges will still apply. When you come to top up, what you owe in standing charges will be taken from your account.
Do you pay standing charges with a smart meter?
Yes, even though you don’t have someone come to your home to read the meter, you’ll still pay a standing charge. However, you might find your standing charge is slightly lower compared to if you didn’t have a smart meter.
Can I avoid paying a standing charge?
As a rule, if your tariff includes a standing charge, it will need to be paid. That said, some energy suppliers are willing to discuss options if you know your property is going to be empty for a while (for instance, if you’re in the process of selling it).
Are there zero standing charge tariffs available?
Energy providers do offer zero standing charge tariffs, but these are relatively few and far between. Typically, energy plans with no standing charge are pay-as-you-go or prepayment tariffs.
The benefit of a zero standing charge tariff is that you only pay for the energy you use. However, you’ll need to bear in mind that these tariffs tend to charge a higher unit rate for gas and electricity. So, if you’re a medium to heavy energy user, you could actually end up paying more overall.
What should I consider before switching to a zero standing charge tariff?
Regardless of tariff type, when you compare energy deals, consider:
- Unit costs and standing charges – this will give you a better idea of how much you might actually spend rather than looking at a monthly estimate or Direct Debit.
- Contract length – energy contracts usually last between 12-24 months, so think about how long you want to be tied to a deal for.
- Exit fees – energy deals have a 14-day cooling off period. If you change your mind after this, you may have to pay an exit fee.
How do I find the most affordable energy tariff?
If your current energy contract is about to come to an end, comparing a range of tariffs really is one of the simplest ways of gauging what deals represent good value for money.
As well as comparing energy tariffs, consider ways to save energy so that you’re minimising what you actually use. While big changes like adding insulation and double glazing is expensive, you can cut down on energy and lower bills with lots of small adjustments too – for example, with these 11 ways to save energy. You can also find more advice and insights, in our energy guides: