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Gas Prices

Business gas standing charges explained

If you’re looking to lower your gas bills, there are two main charges you’ll need to consider – the unit rate and the standing charge.

Measured in kilowatt hours (kWh), the unit rate is the amount you’re charged per unit of gas you use. If you sign up to a fixed rate gas tariff, this rate remains the same until the deal ends, but your bills will still fluctuate depending upon how much gas you use in any given month.

The standing charge is a fixed, daily fee that stays the same no matter how much energy you use, and is in place to cover the costs of keeping your home in gas, such as connection to the energy network, carrying out meter readings, and network maintenance.

How do gas standing charges work?

Every energy tariff now contains a separate standing charge, so you can see exactly how much your supplier is charging to keep you connected to the grid.

The reason all tariffs must now show the standing charge is because Ofgem, the energy regulator, ruled that all tariffs must follow the same pricing structure, so customers can see exactly what they’re being charged for. This transparency also makes price comparison a lot easier.

You can find out how much you pay in standing charges by taking a look at your latest energy bill, under the section that breaks down your charges for that billing period.

Standing charges on gas bills can be anywhere between 10p and 80p per day, so it’s important to factor in this cost when comparing gas tariffs.

Under the Ofgem rules, energy companies don’t actually have to impose a standing charge, and some suppliers do offer gas tariffs without standing charges. If you choose one of these tariffs, you’ll only be charged as and when you use gas, but while this might sound ideal, there’s a good chance it won’t save you any money in the long run.

Could you save money with a no standing charge gas tariff?

You might assume that no standing charge gas tariffs will cut your bills as they do away with the daily fee, but these tariffs charge a higher unit price for gas, meaning they could actually work out more expensive, especially if you’re a medium-to-high use energy customer.

No standing charge tariffs are designed for customers who don’t use a lot of energy, such as those who leave their property empty for extended periods of time, ideally up to nine months a year. But you might find you benefit if you only use gas at certain times of the year, such as the really cold months, when extra heating is needed, so you really need to work out how much you could save by losing the standing charge, remembering to factor in the higher unit costs.

It all depends upon your specific circumstances, but if you think a gas tariff without standing charge could benefit you, click compare prices at the bottom of the page and enter your postcode.



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