What are standing charges?
A daily standing charge is used to cover the fixed costs of making gas and/or electricity available for you to use. It is charged against each meter, so if you have one gas meter and one electricity meter, you will be charged two standing charges. Standing charges are usually given in terms of pence per day (per meter), e.g. 25p/day.
Your standing charge keeps your home connected to the energy network, including maintaining your meter, maintaining the network, and ensuring energy can be transported to your home. Your standing charge also contributes towards the cost of government initiatives like reducing carbon emissions and supporting vulnerable customers.
Why have standing charges increased so much over the past years?
Over the past few years the energy industry faced a number of unprecedented challenges, all of which has led to Ofgem increasing the price of standing charges by an unusually large amount.
While unit rates are primarily made up of wholesale energy costs and the normal costs of running a business (staffing and operational costs etc.) standing charges represent a wider variety of industry costs.
These industry costs include the increases in fixed network costs, this is the cost of maintaining cables and pipes that distribute energy, costs which have gone up nationwide due to changes in the labour market and inflation. An increase in policy costs applied by the government or Ofgem, such as green levies and the rise in the warm home discount rebate. Most significantly, the cost of moving everyone whose firm went bust to new suppliers as part of Ofgem's Supplier of Last Resort Process is added to everyone's bills via an increase to standing charges.
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Last updated: Fri, 17 Nov, 2023 at 12:42 PMPrint this page
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