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Standing Charges Explained

Standing Charges Explained

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Last updated: 29 March 2021

It is typical to pay a standing charge for your use of electricity and gas. However, if for example you are a second-home owner, you may be overpaying for energy that you do not use.

What Is a Standing Charge?

A standing charge is the fixed daily rate you have to pay in order to gain access to your electricity and gas supply - it is static and does not vary in relation your usage. Here's what Ofgem has to say: Ofgem - Standing Charges

What Is a Unit Charge?

A unit charge is the amount you pay per kw/h (kilowatt hour) of gas and electricity usage - it increases and decreases according to how much you use.
The short answer is yes, usually. If you do not pay a standing charge, it is likely that you will be charged more per kilowatt hour for your usage. Alternatively, if your standing charge is high, you will generally pay less per kilowatt hour of usage. The amount you pay for each should be made clear to you when reading your energy bills.

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Do You Have to Pay a Standing Charge?

As of 2016, it is no longer a requirement for energy tariffs to have a standing charge. Suppliers can choose to offer no-standing-charge tariffs if they wish. However, most energy deals still demand a standing charge payment.

Despite this, there are currently a few deals on the market that don’t come with standing charges. Though this will inevitably mean you pay more per kilowatt hour of usage, this may still be less than paying a daily rate if your usage is unusually low. For example, if the building you are powering is a second-home or a garage, and you will not be using gas and electricity regularly or consistently, paying the standing charge will exceed the higher cost you pay per kilowatt hour.

In summary, if you occupy a residence for the majority of the year, it is worth paying a standing charge as this reduces the unit cost of your energy, meaning you will ultimately pay less. However, if you are a second-home owner, or your residence is vacant for longer than it is occupied, it is probably not worth paying the daily standing charge.

If the building you are seeking to power is not your primary residence, it is worth at least checking whether a zero standing charge tariff works out cheaper over the course of a year.

Use our energy comparison tool to see a range of tariffs along with their prices, including any standing and unit charges.

How Should I Work Out If a Zero Standing Charge Tariff Will Benefit Me?

To get an average quote, you should work out your average usage. To do this, calculate your monthly usage, and multiply this by the number of months you are using power in the property. For example, if it costs £100 a month to power your second home, but you’re only there for 4 months a year, your yearly bill will be £400. This will most likely work out cheaper than paying a fixed standing charge, which you will still be paying for in the months you are absent.

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Michael Quinn

Author: Michael Quinn

Michael is a dedicated author helping usave to write guides, blogs and news for the last four years. When not writing articles, you can usually find him at wine tasting events or having a political debate on the night tube.

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