What are standing charges? Why businesses pay when not using energy

You’re closed, it’s the holidays, your business site is empty, but you’re still racking up an energy bill. That’s the standing charge.

It can be frustrating to know you’re being charged for electricity and gas even during down times.

Knowing your standing charges and why they matter can help you secure the right energy deal for your business.

In this article:

• Learn what standing charges are on your business energy bill.

• Understand how standing charges affect your costs.

• Discover practical steps to reduce your standing charge.

What is a standing charge in business energy ?

A standing charge is a fixed cost on your energy bill that you pay every day regardless of your usage. Electricity and gas bills come with separate standing charges.

For example, if your standing charge is 50p, you will pay 50p per day, every day, regardless of whether you’re in full flow on a busy Monday or closed for the weekend.

Standing charges help cover the cost of maintaining meters, managing accounts and keeping your business connected to the energy network.

What is the average business standing charge ?

No matter what any supplier or consultancy tells you, there’s no such thing as an average business standing charge.

A small business with a traditional meter may pay 60p per day for their standing charge, but other businesses could tip over £1.50 per day. There is no cap on standing charges for business, unlike the domestic energy price cap.

Your standing charge is determined by a variety of factors:

• Geographic location: Network maintenance costs vary by region. Rural and remote areas tend to pay higher standing charges to cover trickier distribution networks.
• Business size: Larger businesses tend to pay higher standing charges due to their need for greater infrastructure and capacity limits.
• Meter type: Your meter type may attract different maintenance and data-processing costs included in your standing charge.
• Supplier: Ultimately, a supplier controls the final standing charge cost. They can choose to simply cover their costs or build a profit margin into their standing charges.

Businesses could also benefit from tariffs with no standing charges, though these usually come with higher unit rates.

How to reduce your business standing charge costs ?

As we have already explained, your usage has no impact on your standing charge.

The main way to secure a lower standing charge is to shop around for a tariff that offers the right balance of standing charges and unit rates to suit your business needs.

Tariffs with lower standing charges often come with higher unit rates and vice versa.

When comparing tariffs and suppliers, make sure you are not just swayed by the cheapest headline standing charge.

Take the following example based on a business using 20,000kWh per year:

Tariff A - 60p daily standing charge, 26p unit rate

• £5,200 energy cost
• £219 standing charge
• Total: £5,419 annual bill

Tariff B - 80p daily standing charge, 24p unit rate

• £4,800 energy cost
• £292 standing charge
• Total: £5,092 annual bill

In this scenario, the tariff with the higher standing charge is actually more than £300 cheaper due to a more favourable unit rate.

The more energy you use, the more likely you are to benefit from a lower unit rate compared to a lower standing charge. 

How we can help

Business energy is confusing. You know you need to stay on top of such a major cost, but that can be difficult while focusing on running your business and serving your customers.

We get it. We can support you.

Troo exists to help businesses like yours make sense of their energy needs, simplify complex information and make smart decisions that lead to real change and reduced costs.

We are not here to sell you a quick fix. We're here to understand what matters to you, offer clear advice, and take ownership of the hard parts, so energy becomes one less thing to worry about.

Book a free energy health check today for practical guidance on your business electricity, gas or water bills.