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What is a standing charge?

Our expert says...

Hello Katy,

Choosing a tariff and an energy supplier that suits your needs can be tricky, so here’s my quick guide to standing charges:

What is a standing charge?

A standing charge is a fixed amount you pay daily to your gas and/or electricity supplier. It’s a little like a connection fee and you will also have to pay for the gas and/or electricity you actually use.

Why do energy suppliers use standing charges?

Standing charges are used to cover the energy suppliers’ costs, such as meter reading, maintenance and the cost of keeping you connected to the network.

And in the case of gas, a standing charge will also cover any emergency gas supplies.

What if my tariff doesn’t have a standing charge?

If your energy supplier doesn’t add a standing charge to your bill, you will pay two different rates for the gas and/or electricity you use. Known as a “two tier tariff,” you will be charged a higher price for the first set number of units of energy you use. Once you have used this number, the price per unit will drop.

For example, with British Gas (www.britishgas.co.uk), you might pay 2.5 pence per unit for the first 1400 units used each quarter, and 1.5 pence for each unit used after that.

Some gas and electricity suppliers insist on you paying standing charges, while others allow you to choose whether you pay one. Scottish Power (www.scottishpower.co.uk) for example, has a No Standing Charge (NSC) option, which doesn’t charge a daily service fee to customers, and bills customers solely on the basis of energy unit rates.

Standing charge or no standing charge?

Tariffs with a standing charge mean you pay a flat rate charge for the supply as well as for the power you use. Tariffs without a standing charge instead usually build the cost into the unit rate rather than being separate on your bill, so you pay extra for the first units you use until the standing charge is recouped then the same rate as everyone else.

If your house is going to be vacant for long periods of time, if you're going back to the US for example, then a standing charge tariff is probably not suitable for you, as you would still be charged for your energy even though you are not actually using any.

What I suggest

My advice would be to go for a tariff without a standing charge, and if possible opt for an online tariff, which allows you to pay your energy bills by monthly direct debit for maximum savings.

Tariffs with a standing charge do not have a two tier rate and therefore the rate you pay for your energy may appear cheaper, however, the amount you pay through the daily standing charge will make up for this, and could mean that the majority of your bill isn’t actually for the energy you’ve used.

Energy tariffs with a two tier rate let you pay one rate for the first amount of energy you use and then a second rate for the remaining amount, meaning you are actually only paying for the energy you use, which could save you money.

You should use our online comparison tool to see what the best available tariff is for you.

Hope this helps you make a decision Katy!

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