Should I get a no standing charge tariff?

When you look at your energy bill, your overall charge will usually be comprised not just of the fee you pay for actually using your gas and electricity, but also the daily standing charge, which is a common feature of most energy plans. They cover the cost of supplying gas and electricity to your property and keeping the system connected to the grid.

A zero standing charge electricity tariff does not include standing charges, so customers do not have to pay them. However, this saving might be offset by higher charges elsewhere in the overall bill.

If you are on a tariff which includes standing charges, you’ll always have to pay them regardless of whether you’re actually using the energy or not. For those who have properties that aren’t always occupied, this is a fee that won’t be particularly welcome. If you get zero standing charge electricity, you’ll only have to pay for what you use, so in these cases it can be a good option. Additionally, the cost per unit of energy you use often ends up being lowered after a certain amount of energy is used.

The cost of standing charges will vary from supplier to supplier. They’re usually charged at a daily rate and, at the higher end of the scale, could represent an extra cost for your energy that ends up being much higher per year than you might have been expecting.

As a general guide:

Extrapolating the top prices for 365 days, you could see yourself paying around £219 per year in standing charges for electricity and around £292 for gas before you’ve even got to the fees for your actual usage. Even if £100 was taken off either price, it is still a significant amount to pay on top of your usage fees.

There are only a few suppliers which offer no standing charge electricity tariffs, which will limit your options if you’re dead-set on not paying them. They are always subject to change - the energy market rarely stands still - but two suppliers which often offer tariffs with no standing charge for electricity or gas are Ebico and Utilita.

In terms of the big six, who remain popular with consumers around the country, it is unlikely that you’ll find many tariffs with no gas or electricity standing charge. The only one that has recently offered a no standing charge tariff is npower, which might not be the ideal supplier for you.

There are a couple of disadvantages if you sign up to an electricity deal with zero standing charge:

You won’t have as many choices in terms of the supplier and type of plan you go for, which might not be ideal depending on where you live. The fees you pay for the energy you actually use might end up being higher than those charged by other suppliers in order for them to offset the money lost by not imposing a standing charge.

These disadvantages might not necessarily matter to you, but it’s worth considering the whole picture before committing to a no standing charge electricity or gas tariff.

While the market is always subject to change quickly, given that there are so few regular tariffs that offer no standing charge electricity, it is unlikely that you’ll find a tariff for a prepayment meter that doesn’t require the payment of standing charges. This could be a problem because it means that you’ll be paying about 28p per day in standing charges (which would be £102.20 per year) regardless of whether you have any credit on the meter or not. This would then mean that, when you top up, you’re simply paying off the standing charges that have accrued rather than being able to turn the lights on, so it can cost you a lot of money in a relatively short space of time.

Zero standing charges are also available for business tariffs, and work in much the same way as domestic tariffs that don’t include a standing charge. If you operate a seasonal business, like a holiday park or a campsite, not having to pay a standing charge would be ideal.

However, like domestic energy tariffs, business energy tariffs with no standing charge will be subject to higher unit rates, so it’s important that you think about the impact on your bottom line when making your decision.

Ultimately, whether it’s worth signing up to a no standing charge electricity tariff depends on your outgoings and whether you think it is more cost-effective to just pay the standing charge rather than potentially be subject to higher unit rates. If you reside in the property full-time, it doesn’t make sense to pay higher unit rates because you’ll end up cancelling out the savings you make by not paying the standing charge. If the property is a holiday home or a property you otherwise rent out infrequently (a good rule of thumb is if it’s unoccupied for nine months of the year), a tariff with no standing charges could well be the way to go.