Business energy standing charges explained: what you pay before you use a single unit

Every business energy bill has two main numbers: a standing charge and a unit rate. Most people compare the unit rate and skim past the standing charge. That is a mistake, because the standing charge is the part you pay whether the lights are on or not.

Here is what it is, why it exists, why it differs from one quote to the next, and how to compare two offers fairly. As ever, we are an introducer, not an adviser. We explain; you decide.

What is a standing charge?

Ofgem’s advice to non-domestic customers says energy bills have two elements: a standing charge, which is a fixed daily rate, and a unit charge for each unit of energy (kWh) you use. Standing charges have to be paid no matter how much energy you use. They are there to cover fixed costs, such as transporting gas and electricity, which suppliers collect through bills and pass on to the network companies.

Think of it as a subscription for being connected. A shop that is closed for a month still pays it. A busy workshop pays the same daily amount as the same-sized workshop that is quiet, and then pays more in unit charges for the extra energy used.

Standing charge versus unit rate

Ofgem is explicit about the trade-off between the two: standing charges may vary between suppliers, and if the amount collected through standing charges was reduced, the unit cost would be higher and vice versa. That means a supplier with a low standing charge is not automatically cheaper. It may have a higher unit rate that costs you more if you use a lot of energy.

Why are standing charges different from one quote to the next?

Ofgem’s billing guide groups the costs that sit behind the unit rate and the standing charge into buckets: network and metering charges, environmental and social obligations, third-party service fees where they apply, tax, and supplier operating charges. It says suppliers should explain what proportion of each relevant bucket makes up the unit rate and the standing charge.

Several of those costs are fixed in nature, which is why they tend to be recovered through a daily charge. Ofgem’s advice also notes that network costs vary year to year and across different areas of Great Britain. So the same business at two locations may see different figures.

Ofgem’s 2022 advice says what you are charged also depends on where you are, how you pay and your type of energy meter. And Ofgem said in March 2026 that network costs were rising in April to upgrade infrastructure. Whether and how that reaches your bill depends on your contract.

Standing charges and seasonal, quiet or part-used sites

Standing charges matter most where usage is low relative to the number of days. A seasonal business, a site that sits empty for months, or a small unit with little equipment can find that the standing charge makes up a large share of the bill. That is not a fault; it is how the charge is built. It is, however, a reason to look at the whole price, not only the unit rate.

This is an example with made-up round numbers to show the idea, not a quote:

Which offer comes out cheaper depends on your annual consumption, which is why Citizens Advice tells you to have your standing charge, unit costs and annual usage to hand when you compare.

How to compare two quotes properly

1. Get your annual usage. It is on your bill or from your supplier. Ofgem says you will need to give your new supplier your annual consumption and meter details.
2. Write down both numbers for each quote: pence per day and pence per kWh.
3. Work out an annual cost. Multiply the standing charge by 365 and the unit rate by your annual kWh, then add them. Add any other charges shown.
4. Check what is fixed. Ask whether both the unit rate and the standing charge are fixed, and whether any pass-through costs can be added during the term.
5. Check the term and the fees. A lower annual cost for a longer term is a different thing from a lower cost for a shorter one.
6. Check for broker fees. Ofgem says to know whether any broker fees or commissions are included in the price.

If you are being introduced by someone like us, ask the same question of us. We receive a commission from our energy partner when an introduction leads to a qualifying contract. It is free to you, and we do not give advice or recommendations, which is why we encourage you to run the numbers yourself.

What if my standing charge looks wrong?

Check the basics: the meter details, the supply number, the rate type and whether the bill period is right. Ofgem says suppliers must bill accurately based on meter readings, and Ofgem’s best practice guide encourages bills to show whether readings are estimates. If something still looks off, raise it with your supplier. If you are a micro or small business and cannot resolve it, Ofgem says you can take it to the Energy Ombudsman. Our guide to what is inside your bill has a short checklist.

Bills, readings and standing charges

A standing charge is charged by the day, so the number of days on the bill matters. Ofgem’s billing guide recalls the rules suppliers have to follow: suppliers must take all reasonable steps to obtain meter readings at least annually, and make a bill or statement available at least twice a year, or quarterly where requested or if the customer has online account management (with specific exceptions). It also says suppliers should reflect meter readings in bills, and that bills should show whether readings are estimated or actual.

That matters here because an estimated bill covers a period whose length you can check but whose usage you cannot. When the next actual reading arrives, the unit part is corrected. The standing charge, being per day, should only change if the period or rate was wrong. Ask for a breakdown if the two do not match.

Ofgem on usage graphs

Ofgem’s guide says a graph of usage in the bill can help customers relate their energy use to their readings and costs. If your bill does not have one, ask your supplier what usage information is available online.

Back-billing and your standing charge

The Utilities Intermediaries Association summarises one protection for microbusinesses: suppliers cannot charge for energy consumed more than 12 months ago if it was incorrectly billed. That is a general protection about billing errors, not specific to standing charges, but it is worth knowing if you find a long-running mistake. If you think it applies, raise it with your supplier in writing.

Ten things to ask your supplier about your standing charge

1. What is my standing charge today, in pence per day?
2. Has it changed since my last bill, and why?
3. Does my contract fix it for the whole term?
4. Which of Ofgem’s cost buckets does it mainly cover?
5. Is it the same at all my sites, and if not, why?
6. How does my standing charge compare with the one on the renewal offer?
7. Does the offer have a lower standing charge but a higher unit rate?
8. Is VAT included in the figure you are quoting?
9. Can you show my annual cost both ways, at my usage?
10. Can you confirm all of this in writing?

Frequently asked questions

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