What is a standing charge?
When looking at your energy bills, you’ll see two different elements that make up the final cost. The first one is the cost per kWh for either electricity and gas, and the second is a standing charge.
It’s not always clear for consumers what this second charge means, so this article will explain what it is, which can help you better understand how your energy bills are calculated.
What is a standing charge?
A standing charge is the fixed cost of providing a consumer’s home with electricity and gas. The costs that it covers includes the maintenance of the physical connection of your home to gas and electricity supplies, covering manual meter readings, and other related charges.
Part of the cost also goes into helping fund government related initiatives like reducing CO2 emissions or helping to aid vulnerable members of society with their energy bills.
A standing charge is a daily rate, and it’s applied individually to your gas and electricity tariffs. Even if your energy is provided by the same supplier, these rates will not necessarily be the same.
From 2013 Ofgem introduced rules that stated all energy bills should include what the standing charge is in order to standardise bills to make it easier for customers to compare them in the market.
Are there tariffs that don’t include standing charges?
There are some energy suppliers that offer tariffs that do not include any standing charges like Ebico on some of their plans.
If you had a plan with this supplier, a standing charge line would still appear on your bill, but it would be zero. As per above, the reason for this is to keep the layout and structure standardised so that customers can compare tariffs more easily in the market.
Should I move to a plan with no standing charges?
This really depends on your circumstances and how you use energy in your home.
Generally speaking if you are rarely at home (or have a second property) and do not use energy frequently, then it might be sensible to be on a plan with no standing charges given it’s charged as a daily rate.
However, often these types of plans will have higher costs per unit of energy used, so you need to be confident that you won’t be using energy as much in order to make up the difference.
The best way to be sure about what is suitable for your home is to enter your energy usage details into Lumo, and see what’s the right plan for you.
Reading your bill . . .
- I’m moving into a new house and need my switch to happen on the same day
- My switch to Lumo happens after my current contract ends, what will happen?
- My switch to Lumo happens before my current contract ends, will I be charged leaving fees?
- How do I contact Lumo?
- What does Lumo promise its customers?