Standing charges on your energy bills. Those daily charges for gas and electricity that you just have to pay, every day, whether you use any energy or not. We get lots of calls from people with concerns about standing charges and have found that energy companies are often pretty rubbish at letting customers know what they are for and how they work. So I thought I’d write a blog about it.
So what are they for? Standing charges relate to the cost of supplying a property with electricity and, if you have it, gas. You could think of it like a rental charge for using the pipes and wires, whereas your unit rates are for the price of the actual energy that you use.
So what’s the problem with standing charges? Well, there are a few, which some of our members are all too familiar with…
- You pay even when you’re not using anything. This one relates to gas. Most households who have a gas supply use gas for heating, hot water and cooking, but some use gas for heating, but cook and heat water with electricity. Assuming you don’t use any heating between around May and October, this means that for five months you aren’t using any gas at all. The problem is that if you pay a standing charge, then this is applied even if not a single unit of gas is used. So if your standing charge is 27p, this could amount to paying over £40 for those months. The problem gets even worse if you have a pre-payment meter because you probably won’t have topped up over the summer and when you do, so you can put your heating on, the meter will swallow up a whopping £40. Great.
- Standing charges are not fair. They charge the same amount daily to every household, regardless how much is being used or how many people live there. This means, effectively, that the less you use, the more you pay for each unit – so not a very good incentive to be energy efficient!
- Standing charges are confusing. A big part of our job is trying to help people take control of their energy use so that they can save money, get a fairer deal and be more comfortable at home. Standing charges make bills more complicated, and whilst I understand why they’re there, I also think suppliers could do a better job of explaining them to customers and finding ways to avoid the issues highlighted above.
So are standing charges good for anyone?
Yes. If you are a low user, standing charges mean you pay more per unit, BUT if you are a high user, standing charges mean you pay less per unit. This is because the standing charge is the same, per day, regardless how much you use. So standing charges work out better for higher energy users.
Are there tariffs which have no standing charges?
Yes, there are. There are a few companies out there who offer tariffs with no standing charges. We wouldn’t recommend them for everyone, though, because tariffs without standing charges have higher unit rates. This is because the suppliers will always need to cover their costs (and earn a profit!) – so they will either split the costs between standing charge and unit rate, or they will recover all the cost from the unit rate alone. Therefore, tariffs without standing charges are only usually a winner if you are a very low user, or if your house is going to be unoccupied for a significant part of the year, or if you only use your gas for heating.
If you think you might be better off switching to a tariff without standing charges, but aren’t sure, give our team a call on the general enquiries number (01752 477117) and we should be able to help.