Business energy standing charges explained

What is a standing charge?

A standing charge is a fixed daily amount, shown in pence per day, that covers costs of supplying your premises, such as network and metering costs and supplier operating costs. It applies for every day you hold the supply, including days your business is closed.

Business energy is not covered by the domestic price cap, so business standing charges are set by suppliers within the contract you agree. They can differ noticeably between offers for the same premises.

Why standing charges vary

Your location, meter type, supply capacity and the contract structure can all affect the daily charge. Some offers pair a higher standing charge with a lower unit rate, or the reverse. Neither is automatically better: the right balance depends on how much energy your business uses.

How to compare standing charges and unit rates together

Work out an annual cost for each offer using the same consumption figure. Multiply the standing charge by 365, add annual kWh multiplied by the unit rate, then apply VAT and Climate Change Levy consistently.

• Use annual consumption from actual meter readings where possible.
• Low-usage sites such as storage units are more sensitive to the standing charge.
• High-usage sites such as kitchens or workshops are more sensitive to the unit rate.
• Check whether any charges are billed separately or passed through.
• Compare offers for the same contract length and start date.

Can a business avoid standing charges?

Some suppliers offer tariffs with low or no standing charge, usually with a higher unit rate. These can suit premises with very low use but may cost more where consumption is higher. Ask for the full price breakdown and calculate the annual total before deciding.

Frequently asked questions