What is a standing charge?
A standing charge is a daily amount you have to pay for energy, which covers all the costs of getting gas and electricity to your property.
Only have a minute? We’ve started a Shorts series explaining standing charges. Watch it here:
What costs does your standing charge cover?
All the costs associated with supplying energy, before you use any of it (which you then pay for per unit). That includes things like:
- Using and maintaining the energy networks, wires and pipes that carry gas and electricity across the country to your home
- Keeping your home connected to the energy network
- Carrying out meter readings
- Payments towards government initiatives that help vulnerable households and reduce CO2 emissions
These are fixed costs suppliers like us are charged for every meter (whether the meter uses any energy or not).
Why do standing charges vary region to region?
Standing charges vary depending on how tricky it is for suppliers to get power to your part of the country – like in rural areas, where the networks are more spread out and there are fewer households to split the cost. Each of the electricity distribution networks (DNOs). Each DNO combines their costs and splits them between everyone living in the area where they operate, which means each region’s standing charge varies slightly.
Another perverse element of our outdated electricity system.— Greg Jackson (@g__j) October 12, 2023
Scotland, wales and northern England have much higher standing charges because they have lower popn density - but pay the same per unit even though they generate much more. Elec should be cheapest where it’s generated https://t.co/yr27Bb4tYy
How does the standing charge work with prepayment meters?
If you have prepayment meters, your daily standing charge will be taken from your top ups. That means if you don’t top up for a while, you’ll still need to pay the standing charge next time you top up – like if you haven’t topped up your gas over the summer.
Why have standing charges gone up?
Recent increases to the electricity standing charge are driven by two changes. The first is the administrative cost of taking over the customers of the energy suppliers that went out of business during the energy crisis. The second is changes to how the industry charges customers for using the distribution network (the cables that deliver electricity to your home). These costs have been moved from your unit rate to your standing charge.
We think standing charges unfairly impact homes in areas with lower population density, like Scotland, Wales and northern England. And consistent increases to standing charges make it a lot more difficult for people to see a reduction in their energy bills when they've changed their usage habits.
That's why we strongly opposed regulatory changes that added more costs to the standing charge in consultation. In 2022, we took a stand against increasing standing charges, offering ‘standing charge holidays’ of up to 6 months for 100,000 of our customers who need it most. We also kept standing charges 4% lower than the price cap for customers on Flexible Octopus, and chose not to increase them at all with the October 2023 price cap.
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