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The Pros and Cons of Zero Standing Charge

If you’ve ever wondered about the possibility of getting business energy tariffs with zero standing charge (and if it’s a good idea to do so), then you might deem this article worthy of your curiosity.

There are only a few business energy suppliers in the UK that offer zero standing charge for their business electricity and gas tariff such as Ebico, Npower, and Utilita.

Before we get into this topic a wee bit further however, we’d like to give you a brief refresher on the definition and purpose of a daily standing charge. “What even is a standing charge and how does it affect my monthly bill?”, some of you might have asked this exact same question at some point in your lives; that is completely understandable.

A standing charge is a fixed amount that consumers will be required to pay to cover energy supplier expenses and services such as, well, consistently supplying you with the energy you need all while keeping that supply intact during the entirety of your contract term. 

The amount of energy you consume is not necessarily included in this rate⁠—that means even if you end up not consuming any energy at all (let’s say you own a vacation home, your office building is currently closed for the holidays, or you pretty much just run a seasonal business) you will still have to pay a standing charge.

Standing charges are priced on the daily. No, you do not have to pay the standing charge each day per se. Instead, it will be included in your monthly bill alongside your current Unit Rate. 

Standing charges vary depending on the type of business energy contract you’re on.

Some suppliers charge differently: from a higher unit rate to a low standing charge or vice versa. It will all differ from one supplier to the other.

Businesses on Fixed Energy Contracts are normally charged with a fixed rate of pence per day or pounds per month, depending on their supplier.

Standing charges (as well as Unit Rates) might fluctuate based on a number of different factors for businesses on Fixed Energy Contracts. Some suppliers tend to alter the fee on a per-meter basis as opposed to Fixed Energy Contracts.

Although suppliers prefer imposing standing charges as it gives them a certain sense of security that they will still be able to earn money whether or not you consume energy, may it be electricity or gas. Standing charges (for businesses) typically range from 15p, 25p, 28p, 130p, 160p per day for either gas or electricity. 

Now that we’ve fully grasped the sole purpose of standing charges, let’s dig in a little deeper and find out whether or not your business will benefit from a no standing charge tariff.

Below we’ve explained the advantages and disadvantages of a no/zero standing charge tariff:

The Pros

Businesses that run or operate occasionally or seasonally (i.e during the holidays, summer, or maybe even only on weekends) will surely benefit from a zero standing charge tariff. This is mainly because they will only pay for the energy they actually use—that’s it.

Same thing applies for homeowners. If you own a vacation house, you won’t really be charged anything if you’ve been away for a prolonged period of time.

Another advantage of a no standing charge tariff is that most suppliers often reduce their unit rates/costs based on an ample amount of electricity and gas your business has consumed. This is exceptionally beneficial for businesses with multiple branches or premises that are all on one business energy meter.

The Cons

Unfortunately, zero standing charge tariffs won’t always be the key to cutting down business energy costs. They have their disadvantages too—especially for businesses that generally have a medium to high energy consumption. Suppliers often hike up their unit rates for every kWh of electricity and gas you consume, which might actually lead customers on a “no standing charge contract” to pay a bit more on a monthly basis. 

There’s no denying the fact that your business will be able to save money when it is not operational, but the amount you might be charged with once it’s open can be quite overwhelming, especially in the long term. 

Should I get a no standing charge energy tariff? Will it benefit my business?

If your business is energy-intensive and operates all the year round, then switching to a Zero Standing Charge tariff is a big no-no. While the idea might sound cheaper in your head, no standing charge tariffs don’t really pair well with immense energy consumption. In fact, you might end up paying more for your energy than businesses paying daily standing fees. 

Like we mentioned above, unit rates tend to be quite higher for no standing charge tariffs. On the other hand, contracts with higher standing charges often come with very low unit rates. So, technically speaking, the outcome will hinge solely upon your circumstances. 

If your business operates only seasonally (such as summer camps, vacation cottages, etc.), then you will definitely benefit from this type of tariff. Ideally, businesses and companies that are unoccupied or closed for at least 9-months or more prefer this type of tariff plan. It makes sense, because they seldom consume energy, and when they do, they’ll only pay for the energy they used during their presence. Take note, unit prices can be much higher with zero standing charges. So you might have to think it through beforehand! Feel free to fill in the form above to compare energy tariffs; we can help you determine whether or not Zero Standing Charge Tariffs work best for you.

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