This guide explains why most consumers pay standing charges on their energy, and examines whether switching to a plan with no standing charge makes sense for your home.
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Wondering what a standing charge is and why it appears on your energy bill? You're not alone. This guide will help you understand what standing charges are and whether you're better off on a tariff that includes them or not.
What is a standing charge?
The standing charges on your energy bill cover the fixed costs of providing your home with both gas and electricity (each will have its own standing charge).
These costs include the price of keeping your home connected to the energy network, carrying out meter readings, maintenance and other related charges.
Part of your standing charge will also go towards the cost of government initiatives aimed at helping vulnerable homes and reducing carbon emissions.
How do standing charges work?
Your energy plan’s standing charge is a payment you make to your supplier for the reasons listed above. It will be listed on your energy bill as a "daily unit rate". You can find out more in our guide to understanding your energy bills.
Since the Retail Market Review (RMR) every energy tariff has included a standing charge. The idea is that by making all energy plans follow the same price structure, it will be easier for consumers to compare energy tariffs across the market and identify the best one for your household.
How much are standing charges?
However, there is nothing to stop energy suppliers from setting their standing charge at £0.
Which energy tariffs don’t have standing charges?
As mentioned above all energy plans have standing charges, but a few have them set at £0. If you select a plan with a £0 standing charge, you won’t be paying a standing charge, but you will still see it listed on your bill.
Only a few energy suppliers offer plans with £0 standing charges. As of January 2020, these include Ebico and Utilita.
Should I switch to a tariff with no standing charges?
It really depends on your personal circumstances. In most cases it makes sense to go for an energy plan with paid standing charges as there is a greater amount of choice and they're usually cheaper than plans that don't have standing charges.
Generally speaking, the way it works is that if you select a plan with high standing charges you are likely to be paying less per unit of energy. If you pay no standing charges, your energy is likely to be pricier.
If you have a property that is uninhabited for a large part of the year, then it is worth considering a plan with standing charges set at £0. For example, if you have a garage which is separate to your home or a flat which is only used a couple of months a year.