Standing charges explained
Understanding the various aspects of your energy bill is important to help you manage your energy consumption – as well as ensure you’re getting a fair price for your gas or electricity.
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Energy suppliers specify two key charges when creating quotes for your energy contract. Being aware of these charges can help you to make sure you’ll be paying a fair amount for your energy usage. Of the two, one is called the standing charge and is explained below.
What is the standing charge?
The standing charge is a fixed daily charge imposed by your supplier to cover costs they incur when transporting energy to your premises. These costs include fees the supplier has to pay to the National Grid or local distributor for supplying energy to your business, the cost of sending someone to read your meter, and the meter operator’s costs for the maintenance of your meter. Standing charges may also include an emergency gas service.
Most business electricity bills will include a standing charge, although some business gas bills may be provided without a standing charge. It is important to note that the standing charge is not related to the amount of energy you use.
Your supplier may charge you more if your business premises is in a remote or rural area, as it costs more to transport your energy and repair any damage to the energy network. Standing charges also tend to differ depending on the size of the business – typically, the larger your business, the lower the standing charge.
Typical standing charges
Typical standing charges per day include:
- Microbusinesses: 27p for electricity and 32p for gas.
- Small businesses: 25p for electricity and 30p for gas.
- Medium-sized businesses: 22p for electricity and 28p for gas.
While some suppliers quote standing charges per year, it is usually quoted as a per day amount. As your energy bill usually arrives on a monthly basis, your standing charge is usually averaged out into a monthly charge. For example, if you are a small business charged 25p per day, your monthly charge will be:
25p x 365 (days in a year) = £91.25 per year. £91.25/12 (months in a year) = £7.60 per month.