How do standing charges work on business energy contracts?

When it comes to standing charges on business energy contracts, you have two options: you can either have one or not. 

Sounds simple right? 

Well, it’s not as easy as it might seem. Currently, there aren’t any electricity tariffs that offer you a zero standing charge option. However, the good news is that there are ‘no standing charge’ business gas tariffs in the UK. 

One option may be more suitable for one type of business over another. That’s why here at Bionic, we’ve cut through the noise to help you understand what’s the best option for your business energy contract.

What is a standing charge?

A standing charge is an amount you have to pay for the energy company to supply you with gas and electricity. It covers the costs associated with keeping your property connected to the energy network. 

In 2016, Ofgem declared that it’s no longer required to have a standing charge applied to an energy tariff. However, there are still few ‘no standing charge’ tariffs around.

How do standing charges work on different types of contracts?

Standing charges can be applied differently depending on what type of contract you’re on. If your agreement includes a standing charge, then it will be applied regardless of your energy use — even if you use no energy at all. 

When you choose your business energy package, consider your unique circumstances. Are you only open at certain times throughout the day? Do you use a lot of energy? The answers to these questions can impact your costs significantly. 

Fixed contracts

A fixed contract offers you the opportunity to lock in your gas and electricity prices for a while, removing the fear of spiralling costs. While you may be paying slightly more per unit of energy you use on a fixed contract, it does mean you know what you’ll be paying each month. 

Your supplier can’t raise your standing charge in line with wholesale energy market price fluctuations on a fixed contract. Equally, though, you’ll miss out on lower charges if the market drops.

While you can’t currently secure an electricity tariff without a standing charge, it’s worth looking at the costs when it comes to comparing your fixed-term gas contract. A ‘no standing charge’ contract is likely to have a higher rate overall, so it’s prudent to calculate what the difference might be. It may not always save you money to go with no standing charge.

Additionally,  you may have to pay if you want to leave to switch to another supplier if you’re on a fixed contract. Your supplier will write a termination fee into your agreement, so always check you’re happy with it before you sign on the dotted line.

Variable contracts

Choosing a variable or flexible contract might be a better solution if your energy consumption is quite high. It can also mean you aren’t tied in for as long — usually only 30 days — making it easier to switch suppliers or move over to a better tariff. 

Your standing charge on a variable contract might be less easy to spot on your bill, hiding in plain sight under a pass-through clause. This allows your supplier to increase the unit charge and standing charge if they see their costs increase, allowing them to maintain their margins. 

Are standing charges different for business energy users than domestic customers?

Business customers might pay different standing charges than those a domestic customer might pay. 

This is because the charge is linked to maintaining the supply to your premises, including infrastructure, so it may vary depending on your use. Your business may even be subject to additional charges imposed by the government relating to reducing carbon emissions. 

How much is the standing charge for business energy?

The cost of your standing charge will depend upon the type of energy deal your business is on, the size of your business, and the amount of energy it uses. But to give you an idea of how much you can expect to pay, below is a breakdown of the average standing charges for business gas and business electricity.

Please note that the rates shown are pre-energy crisis and pre-Ukraine conflict. Prices are currently so volatile that it's impossible to quote average prices

How much is the standing charge for business electricity?

Business size Standing charge (daily)
Microbusiness27.1p
Small business26.9p
Medium business31.0p
Large business30.1p

Prices may vary according to your meter type and business location. Standing charge and unit rates are based on businesses that switched or renewed gas and electricity with Bionic between January 2021 and March 2021.

How much is the standing charge for business gas?

Business size Standing charge (daily)
Microbusiness25.6p
Small business32.0p
Medium business61.0p
Large business126.5p

Note: Prices may vary according to your meter type and business location. Figures shown are the average unit rates and standing charges quoted by Bionic per business size from June 1 to June 17, 2022

Are energy deals with no standing charge available?

It is possible to switch to a ‘no standing charge’ energy tariff for your gas supply. This means you’ll only be paying for the gas you’re using. 

That said, your unit rates may be higher as a result. Whether you save money depends on when, how, and where you use your energy as to whether you’ll save. 

We have a team of experts who can help to guide you through this process. Why not get in touch to discover if you could save on your business gas prices with Bionic?

‘No standing charge’ tariffs: The pros and cons

To help you to decide what is best for your business, we’ve listed out some pros and cons of ‘no standing charges’ tariffs.

Pros

  • You’ll only pay on the days your business premises are being used.
  • If your energy usage is relatively low, a ‘no standing charge’ tariff may offer you savings overall.

Cons

  • You may be subject to higher unit rates on a ‘no standing charge’ tariff; essentially, everything you use will cost you more. You may get a better rate if you regularly pass a certain usage threshold, though.
  • If you use a lot of energy in your business, you’re likely to pay a lot more due to the higher unit rates on a ‘no standing charge’ tariff.

Since standing charges stopped being a requirement back in 2016, more and more suppliers are offering a range of ‘no standing charge’ gas tariffs to their customers. 

If you’re unsure whether your business would benefit from a ‘no standing charge’ tariff, get in touch with our team of energy experts to find out more.

How Bionic can help you get the best energy deal

When comparing business energy deals, you'll notice there are no off-the-shelf options like with domestic energy deals. That's because commercial energy deals are tailored to the needs of each individual business.

The tech-enabled experts at Bionic can take the time and hassle out of comparing and switching business energy suppliers. We use smart data to cut down the amount of form-filling you need to do, and compare deals from a panel of trusted UK energy suppliers.

We'll then talk you through the quotes on screen and answer any questions, so you can be confident you're getting the best contract for your business. And our Digital Renewal Service means we proactively look for another great deal when your current one is coming to an end.

To start comparing business energy quotes, just pop your postcode in the box on the right or call 0800 156 0899.