Standing Charges for Gas and Electricity - Explained - Forbes Advisor UK - Forbes

Standing Charges for Gas and Electricity – Explained – Forbes Advisor UK – Forbes

If you check your energy bills, you may notice that they include what are called “standing charges,” in addition to the amount you pay for the gas and/or electricity you use.

The standing fee covers the cost to your supplier to actually deliver power to your property. In this respect, it’s similar to the rental fee you pay for a landline phone.

As such, it must be paid whether or not you use any gas or electricity, which is why you will receive a bill even if your property is vacant during the respective period.

Here’s everything you need to know about standing charges for gas and electricity — from what they cover to how much they cost, and whether you can avoid them.

What are the permanent gas and electricity charges?

Standing gas and electric charges are the fees your power supplier charges to give you access to energy – they help pay for UK power distribution networks. In addition to almost all energy bills, they are generally fixed at a fixed daily rate.

However, the level of this rate can vary greatly, depending on the type of energy, the company you provide, and where you live.

The amount you will have to pay will also depend on whether you use a single fuel or dual fuel tariff.

Standing fees also vary in line with the energy price cap imposed by the UK’s energy regulator, Ofgem.

What is happening in the UK energy market?

There are currently no power deals priced below standard tariffs, so we have temporarily suspended our conversion service.

How much are the permanent gas and electricity charges?

Standing fees for gas and electricity can vary by region and supplier, but Ofgem sets them.

As of April 2022, the permanent electricity fee on the monthly tariff is set at 45 pence per day, and the price of gas is set at 27 pence per day.

The permanent electric charge nearly doubled from the previous maximum of 25 pixels.

If you pay the highest prices for both types of energy, the standing fee will cost you around £263 a year – up from £186 a year you would have paid with the previous energy price cap set.

Why do I have to pay the standing gas and electricity fees?

Energy suppliers use a flat fee to cover costs such as:

  • Maintenance of power networks, wires, and pipes that carry gas and electricity to your home
  • Connect your home to the power grid
  • Make meter readings.

The new standing fee limits introduced in April 2022 also cover the administrative costs of turning clients of failed energy companies into new suppliers.

According to research by Fuel Poverty Action, these administrative costs represent £68 of the £75 annual increase.

As a result, energy savings can reduce your bills to a certain extent. Cutting energy use reduces the amount of gas or electricity you have to pay for, but has no effect on higher permanent charges, which stay the same no matter what energy you use.

What if I have a prepaid meter?

Prepaid Energy Fee, where you pay as you go with a prepaid meter, also includes the daily flat fee for gas and electricity.

These permanent fees tend to be more expensive than the monthly payment fees, because the installation and maintenance of meters costs energy suppliers money.

If there’s no credit on your prepaid meter, these daily charges will continue to accumulate, so you may find some or all of the first money you set aside to pay what you owe in the standing charges.

Prepaid customers typically charge around 50p per day in flat fees for electricity and 37p for gas, but, again, this will depend on your supplier and where you live.

I have a smart meter – do I pay a flat fee?

If your supplier charges a flat fee, you will still pay them if you have a smart meter.

This fee will be included in the total shown on your meter, which tells you how much energy you used per day, week, and month.

So even if you don’t use any power all day, the screen will still show that you were charged a small amount.

However, the standing fees for smart meter users are often lower than those paid by customers with a standard meter, because having a smart meter reduces your supplier costs.

Who sets the permanent gas and electricity charges?

Your power supplier determines the level of standing gas and electric charges you have to pay, but Ofgem limits how much your suppliers can charge.

Ofgem ruled that energy tariffs no longer need to include flat fees based on the recommendations of the Competition and Markets Authority in 2016. However, the vast majority of energy suppliers continue to add them as part of the total energy cost.

When you compare energy deals on a comparison website, the price you offer will include the fixed charges for both gas and electricity, as well as the energy itself.

Can I avoid paying the standing fee?

You may be able to avoid paying permanent gas and electricity fees if you can find a tariff without a flat fee. However, these deals are rarely offered.

And if you can find a non-constant power deal, that probably means paying more for each power unit you use.

As a rule, a “no flat fee” energy tariff makes sense only if you use very little energy, because the property is a vacation home, for example, and is empty for long periods.

If you are moving to new property, you may be able to ask the supplier to suspend standing charges while the property is not occupied.

What is happening in the UK energy market?

There are currently no power deals priced below standard tariffs, so we have temporarily suspended our conversion service.

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