How do standing charges work on business energy contracts?

Most business energy contracts come with a standing charge. This is a flat fee that's charged daily, regardless of whether or not you use any gas or electricity. 

Although there are tariffs that have no standing charge, these are rare and generally only available on business gas tariffs in the UK. And while you may think a no-standing-charge energy contract has to be a better option, it could work out more expensive.

Let's take a more detailed look at standing charges and what they're used for, along with the pros and cons of a no-standing-charge energy deal.

Five-point summary on standing charges for business energy

1. It's a fixed daily cost, not a usage charge. Your standing charge is billed every day, regardless of how much or how little energy your business uses, covering the cost of keeping your premises connected to the gas and electricity networks.
2. Business standing charges aren't capped. Unlike domestic customers, who have some protection through the Ofgem price cap, businesses have no equivalent regulation on standing charges. This means yours can rise at renewal without restriction.
3. The amount you pay depends on more than your supplier. Your meter type, TCR band, business size, and location all influence your standing charge, which is why two businesses on the same tariff can pay very different daily fixed costs.
4. No standing charge doesn't always mean a better deal. Tariffs without a standing charge typically carry higher unit rates, so unless your energy usage is low or your premises sit empty for long periods, the maths may not work in your favour.
5. Reviewing your standing charge at renewal could save you money. Comparing the full contract cost - unit rate and standing charge combined - across multiple suppliers is the most reliable way to ensure you're not overpaying, and a broker can do that work for you. It may also be worth factoring in non-commodity costs, though these are usually variable, even on a fixed-rate 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. This includes service administration fees, network maintenance, and the cost of meter reading visits. 

The cost of building pylons and fitting cables is also covered by the standing charge. It's also used to recover unpaid energy bills and supplier of last resort payments. This is when an energy supplier goes bust and its customers are moved to another provider.

In 2016, Ofgem declared that it was no longer required to have a standing charge applied to an energy tariff. But there are still very few ‘no standing charge’ tariffs available.

Why do standing charges increase?

Standing charges tend to go up for a few reasons. They are often driven by costs that have nothing to do with how much energy you use, including:

• Network and infrastructure costs - A large chunk of your standing charge pays for maintaining and upgrading the pipes and wires that deliver energy to your property — the gas distribution network and the electricity grid. These are known and non-commodity costs. As the UK invests heavily in grid upgrades to support the shift to clean energy (the National Grid alone needs an estimated £58 billion by 2030), those costs get spread across all consumers through the standing charge. Find out more in our guide to TNUoS and DUoS charges explained.
• Policy and environmental levies - Some government schemes, like funding for energy efficiency programmes, are recovered through standing charges rather than unit rates. When new schemes are introduced or existing ones are extended, standing charges can creep up.
• Supplier operating costs - Metering, billing, and customer service infrastructure are recovered through the standing charge. As smart meter rollout continues and systems are upgraded, these costs fluctuate.
• Location - Standing charges vary significantly by region because the cost of maintaining local distribution networks differs. Rural areas, where infrastructure serves fewer properties spread over a greater distance, tend to have higher standing charges than dense urban areas.

For businesses specifically, standing charges are also influenced by meter type and connection size. A half-hourly meter or a large commercial connection will carry higher fixed charges than a standard small business meter.

It's also worth noting that even when wholesale energy prices fall, standing charges don't always follow. This is because the costs they recover are largely fixed infrastructure costs rather than commodity prices. 

That's why you can see a household price cap drop while standing charges actually rise, as happened in the April 2026 cap, where the electricity standing charge increased from 54.75p to 57.21p per day even as the unit rate fell.

But there's no price cap on business energy, so why are non-domestic energy users seeing hikes in their standing charges? One reason could be that suppliers have had to cover the cost of dozens of suppliers going bust over the last few years. Another could be to cover increased transportation costs caused by supply chain issues - if it becomes more expensive to get the energy to customers' premises, these costs will be passed on by suppliers. 

How do standing charges work on different energy 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 compare business energy, 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 for 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, the amount of energy it uses, and its TCR band. TCR stands for targeted charging review, which is an Ofgem initiative that shifted energy distribution and transmission charges (known as DUoS and TNUoS charges) from energy unit rates to standing charges.

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 on contracts sold by Bionic between July 10 and July 17, 2023.

How much is the standing charge for business electricity?

How much is the standing charge for business gas?

^{Note: Prices are correct as of April 2026. Rates and bill size may vary according to your meter type and business location. The prices you’re quoted may be different from the averages shown. The figures shown are the average unit rates and standing charges received by Bionic from our panel of suppliers from April 1 to April 9, 2026.}

What is Targeted Charging Review (TCR)? 

TCR was introduced by Ofgem to modernise the electricity network and level out transmission (TNUoS) and distribution (DUoS) charges across a wider mix of customers. Before we explain what that means, here’s a quick refresher on the transmission and distribution you’ll find on your business energy bills: 

• TNUoS (Transmission Network Use of System) charges cover the cost of building and maintaining transmission infrastructure (like pylons) 
• DUoS (Distribution Use of System) charges cover the cost of installing and maintaining local electricity distribution networks that help distribute power to your business (like substations) 

These charges used to be included as part of the unit rate, but changes in energy generation and consumption have seen a growing number of businesses become less reliant on the grid. This meant that fewer businesses were contributing to these transmission and distribution network charges and those that were had to pay more to make up the shortfall. 

That’s why Ofgem changed how they were funded. The regulator decided that best way to level the playing field, so more businesses contributed, was to apply these fees to the standing charge. 

As part of the shake-up, each business was allocated a TCR Band by their local distribution network (for example, UK Power Networks would have allocated TCR Bands to businesses across London, the South East and East of England). 

• The DUoS element of the change took effect on April 1, 2022 
• The TNUoS element took effect on April 1, 2023 

These bands are allocated on meter size, not consumption. If, for instance, you use a relatively low amount of energy but have a half-hourly meter (which is used for high-consumption businesses), they will be allocated a higher TCR band. 

The effect of all of this might be that a business that is used to paying an average standing charge (say £1 to £2 per day) could now pay something closer to £10 per day. 

If you're in this position and think your standing charge is too high, it could be worth speaking to your business energy supplier to find out if you can get a replacement meter or change the profile of your existing meter. You can find out more in our guide to business energy meter installation.

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. Valda Energy is currently offering no-standing charge business energy contracts. Check out the latest business energy rates and standing charges now.

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 our panel of 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.

FAQs on the standing charge on your business energy bill

Need more information on the standing charge and how it affects your energy bill? Check out the answers to some of the most frequently asked questions below:

Is VAT charged on business energy standing charges?

Yes. Standing charges on business energy contracts are subject to VAT at the standard rate of 20%, though businesses that use energy predominantly for non-business purposes or qualify as low-usage domestic-style users may be eligible for the reduced 5% rate. It's worth checking your VAT classification with your supplier, as an incorrect rate can mean you're overpaying on every bill.

Do business energy standing charges vary by region in the UK?

Yes. Standing charges differ across the UK's electricity distribution network operator (DNO) regions because the cost of maintaining local infrastructure varies, with rural and remote areas such as the Scottish Highlands typically carrying higher charges than densely populated urban regions like London. This means two businesses using identical amounts of energy can pay noticeably different standing charges simply because of where they are located.

Can a business negotiate its standing charge with its energy supplier?

While unit rates are often more openly negotiable, some suppliers, particularly for larger or multi-site businesses, may be open to adjusting the standing charge as part of contract negotiations, especially if you're committing to a longer fixed term or bringing significant volume. For smaller businesses, using a broker like Bionic to compare the full cost across multiple suppliers, including standing charge levels, is usually the most effective way to find a competitively priced deal.

What happens to standing charges if a business property is empty?

Standing charges continue to accrue on vacant commercial premises even if no energy is being used, which can add up to a meaningful cost during periods of closure, refurbishment, or between tenancies. Contacting your supplier to discuss a vacant property rate or a temporary supply suspension, where available, can help reduce this fixed overhead while the premises are unoccupied.

Are standing charges the same for electricity and gas on a business contract?

No. Business electricity and business gas standing charges are set and priced separately, and the two rarely align. They reflect the costs of two distinct distribution networks, which are the electricity grid and the gas distribution network. In practice, many businesses find their gas standing charge is slightly lower than their electricity standing charge, though this varies by meter type, TCR band, and location.

Does having a smart meter affect a business's standing charge?

Installing a smart meter doesn't directly lower your standing charge, but it can improve billing accuracy by eliminating estimated reads, which sometimes leads to unexpected adjustments when actual consumption is reconciled. Smart meters also enable time-of-use tariffs and more detailed consumption data, which can help businesses identify waste and reduce the unit rate portion of their bill even if the standing charge remains fixed.

What is the difference between a standing charge and a capacity charge on a business energy bill?

A standing charge is the flat daily fee covering network access and supply infrastructure. A capacity charge, sometimes called an availability charge, is an additional fixed cost applied to larger commercial connections based on the maximum amount of electricity the business has contracted to be able to draw from the grid at any one time. Businesses with a high contracted capacity but relatively low actual usage may find their capacity charge is disproportionately large and worth reviewing with their supplier or a broker.

Can reducing a business's contracted capacity lower its standing charges?

If a business has contracted for more grid capacity than it actually needs, requesting a reduction in its supply capacity, known as a de-energisation or capacity reduction, can lower the fixed charges associated with that connection, including elements of the standing charge. The process typically involves an assessment by your Distribution Network Operator (DNO) and may take several months, but for businesses that have reduced operations or improved their energy efficiency, it can deliver a meaningful long-term saving.