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A Standing Charge: How it Works On a Business Energy Contract

A business energy contract has a standing charge, but you can also decide to have a contract with a zero standing charge. Currently, a few energy tariffs offer a no-standing charge option. It’s worth noting that there is zero standing charge on a business gas tariff. Before you switch energy suppliers, you need to compare business energy to check whether the available energy tariff has a standing charge. This article discusses how a standing charge works on a business energy contract. 

What is A standing Charge?

A standing charge is simply an amount you need to pay the energy supplier to supply your business with electricity and gas. This charge covers the expenses related to keeping your business premises connected to the energy network.

A standing charge can apply in various ways, but this depends on the type of energy contract you have. And, if your agreement, the energy supplier can apply it regardless of how much your business uses energy, meaning it can still be valid even if you don’t use energy.

When choosing your business energy plan, you must consider your unique business situation. This means you should determine if your business will be open at specific times. Also, assess if your business may use much energy. These factors can affect your energy costs significantly.

That said, you can opt for a fixed contract that gives you the chance to lock in your electricity and gas prices for a while. This can remove the risks of spiraling costs. With this type of energy contract, you may be paying a little more per unit of energy your business utilizes, but you can know how much you have to pay monthly. 

When wholesale market price fluctuations occur, your energy supplier cannot increase it. But you can miss out on lower energy prices when the energy prices drop in the market.

A fixed contract ensures that you are secure regarding an electricity tariff. Regardless, you still have to look at the costs, especially when you compare a fixed-term gas contract. It’s worth mentioning that a zero-standing charge energy contract can have a higher rate, so you must calculate what the difference may be. Sometimes, choosing a zero-standing charge energy tariff may not be a good idea.

Besides, the energy supplier may require you to pay an exit fee if you want to switch to another energy supplier when you are on a fixed energy contract. The energy supplier can include a termination fee in your energy contract, so ensure that you are pleased with it before signing it. 

Choosing a flexible or variable energy contract can be a good solution if your business energy usage is high. A variable energy contract means you don’t lock in your energy price for long. In most cases, it can last about 30 days, making it easier to switch energy suppliers or change to another energy tariff.   

It can be hard to spot your standing charge on variable energy contracts because it’s usually under a pass-through clause. Therefore, your energy supplier can decide to raise the unit rate once their costs increase. This allows them to improve or maintain their profit margins.

Standing charges for domestic customers and business energy users

Business customers can pay different standing charges compared to what domestic customers pay. This happens because it is designed to help your energy supplier maintain the energy supply to your business premises, such as infrastructure. Therefore, it can vary depending on your energy usage. Also, your business can even be eligible for extra charges that the government imposes associated with carbon emissions

You should also remember that the it can depend on the type of energy contract your business has, the amount of energy the business uses, and the size of the business. 

It’s also worth mentioning that you can switch to a zero-standing charge energy tariff for the gas supply. Therefore, you can be paying for the gas your business uses. As a result, your unit energy rates can be higher. Whether or not you can save money can depend on how, where, and when you utilize your energy. 

Remember that there are advantages and disadvantages of zero-standing charge tariffs. One of the benefits is that you can only be paid on the days you are using your business premises. In other words, you cannot pay a standing charge if you don’t use energy. Another good thing about a zero-standing charge tariff is that you can save on energy bills if your energy consumption is relatively low.

One of the downsides of a zero-standing charge tariff is that your business can be subject to higher unit energy rates. As a result, everything your business uses can cost you more money. But you can get a reasonable energy rate if your business uses energy to a specific threshold. 

And, if your business utilizes much energy, there is a chance that you may pay a lot more money. This is because there can be higher unit energy rates on a zero-standing charge tariff.

Standing charges are no longer a requirement since 2016, so there are now several energy suppliers on the market that provide a wide range of zero-standing charge tariffs on electricity and gas. But if you are unsure whether your business can benefit from zero-standing charge tariffs, then it makes sense to contact energy experts at the utility broker. They can take the time to compare energy tariffs and help you switch business energy suppliers. They can assess your business’s energy needs to ensure you get the right energy tariff. They can also answer any of your questions and address all your energy concerns.

Check out: 7 Types of Renewable Energy Sources: Future of Energy

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