What is a Standing Charge?

A standing charge is a fixed daily fee charged by your energy supplier, similar to a service fee or phone line rental . This charge applies regardless of your energy usage and ensures you have access to an energy supply at all times, even if the property is unoccupied.

You will have separate standing charges for gas and electricity if you have a dual fuel tariff.

What Does My Standing Charge Cover?

Standing charges encompass several operational and regulatory costs incurred by energy providers, including:

Maintenance: The upkeep of the energy grid, such as pipes and wires that deliver electricity and gas to homes.

Connectivity: Costs associated with ensuring a stable connection to your property.

Meter Readings: Fees for sending engineers to read meters when necessary.

Government Policies: Contributions to government schemes to reduce carbon emissions and support renewable energy initiatives.

How Have Standing Charges Increased Recently?

In recent years, standing charges have risen significantly, drawing criticism from consumer advocates. For example:

Electricity: In April 2024, Ofgem’s price cap increased the average standing charge for electricity to 60.10p per day, up from 53.34p in early 2024.

Gas: Similarly, the standing charge for gas rose to 31.43p per day from 29.60p per day.

This increase comes despite wholesale energy prices stabilising, leaving many questioning the fairness of these increases.

A Citizens Advice report revealed that standing charges in some regions have surged disproportionately, placing higher financial burdens on customers in areas with lower energy usage.

Why Are Energy Companies Increasing Standing Charges?

Energy companies argue that standing charge increases cover fixed costs, such as infrastructure maintenance and government levies. However, scrutiny has increased, especially as many suppliers reported record profits in 2023 and 2024. For example:

BP, Shell, and other major players have reported billions in profits during a time when household energy bills soared.

A 2023 study by the Centre for Energy Economics found that some energy companies passed disproportionate costs onto standing charges rather than usage fees, disproportionately affecting lower-usage households.

This has led consumer watchdogs and advocates, such as MoneySavingExpert’s Martin Lewis, to call for reforms to make standing charges more transparent and equitable.

What are the Cheapest Standing Charges?

While standing charges are a fixed cost, they do vary by provider, tariff, and region. Currently, some providers offer slightly lower rates or even £0 standing charge tariffs. However, these often come with higher unit rates for energy usage, which can negate savings for many households.

Can I Avoid a Standing Charge?

Unfortunately, standing charges are a contractual requirement for most energy tariffs and cannot be entirely avoided. However, options exist:

Negotiate During Vacancies: If your property will be vacant for an extended period, you may be able to negotiate with your supplier to reduce or pause the charge.

Explore £0 Standing Charge Tariffs: While rare, these tariffs can be beneficial for low-energy users but require careful comparison to ensure savings.

Could Standing Charges Be Removed?

Some experts, including Martin Lewis, advocate for the removal of standing charges, suggesting that fixed costs should instead be incorporated into the unit price of energy. However, Ofgem has resisted this change, arguing that it could increase overall energy costs for higher-usage households.

Removing standing charges would require a complete overhaul of how energy costs are distributed across the UK, which would need to balance fairness with affordability.

Understanding standing charges is key to deciphering your energy bill and exploring ways to reduce your costs. While reforms may be on the horizon, for now, keeping an eye on tariffs and negotiating with providers can help you manage these unavoidable fees.

For more details and insights on standing charge increases and their impact, consult reports from Ofgem, Citizens Advice, and leading energy watchdogs. Links to reliable sources can help you stay informed about future changes.