The Ever-Increasing Standing Charge

23 November 2025

The ever-increasing standing charge

By Adam Novakovic

For UK businesses, cutting energy consumption is no longer enough to keep bills under control. Even companies that have invested in LED lighting, insulation, or energy-efficient equipment are finding that a large part of their energy expenditure is the result of a different cost entirely: the ever-increasing standing charge.


In some cases, businesses using under 150,000 kWh per year are now being charged £40–£50 per day in electricity standing charges alone. That’s £1,200–£1,500 per month, or £14,500–£18,000 a year, before a single unit of electricity is used.


What are standing charges?

A standing charge is the fixed daily fee you pay for your utilities before you’ve used a kWh of gas or electricity. The intention behind the standing charge is that it covers aspects of the energy network that require funds regardless of usage levels, such as:

  • National Grid and local network costs
  • Supplier operating costs and smart metering
  • Some industry and government policy schemes


A recent government consultation found that around half of the typical electricity standing charge is made up of network costs alone, with a further quarter linked to operating and industry costs.

Unlike households -- whose standing charges might sit around £0.70–£1.20 per day -- many commercial sites pay over 50 times this amount. Larger industrial sites can pay significantly more depending on capacity and location.

A major contributor is the way suppliers allocate costs. Research has shown that a growing share of network and policy charges are now recovered through fixed fees rather than unit rates, which hits low-consumption businesses hardest.

 

Why have they risen so much in recent years?

Between 2021 and 2025 the standing charges for many businesses have more than doubled.

The main causes for these rises have been:


  • Post-crisis cost recovery: Supplier failures, customer debt and the cost of emergency support schemes created significant fixed costs that regulators allowed suppliers to spread through standing charges.
  • Network upgrades: Keeping ageing networks running is expensive. The existing networks weren’t prepared for the increasing % of energy derived from renewable sources and needed a rapid update. This was partially down to the short-sightedness of government policies forcing more widespread renewable energy usage.
  • Risk management for suppliers: Recovering more income through a fixed fee gives suppliers a more predictable cashflow than relying solely on units sold -- especially when wholesale prices are volatile.


The result is that low-usage businesses, who were previously able to save more by cutting consumption, now see less benefit because a larger part of the bill remains unmoved.

 

Minimum Spend Before Using Any Electricity

A business paying £45/day in standing charges faces:

o  £315/week minimum spend

o  £1,350/month minimum spend

o  £16,425/year minimum spend


This applies even if the building is:

  • Closed for refurbishment
  • Seasonal
  • Operating part-time
  • Running low-energy equipment only


Many business owners are shocked to learn that 50–70% of their energy bill may now be fixed charges rather than actual electricity consumption

 

Are they set to keep rising?

Looking ahead, there are two key factors likely to dictate how standing charges change.

On one side, Ofgem has signalled massive new investment in energy networks -- around £24 billion between 2026 and 2031. In recent years, these have been exactly the sort of costs that end up in standing charges.

There is growing momentum to reform standing charges for households, but very little of this applies to commercial customers. Even Ofgem’s proposal requiring “at least one low-standing-charge tariff” will only apply to domestic users.


What Can Businesses Do?

Despite limited control over standing charges, businesses can take steps such as:

o  If your agreed capacity is higher than you need, reducing it could significantly cut fixed charges.

  • Switching to a tariff structured to suit your usage

o  Even among business tariffs, suppliers vary widely in how they split costs between standing charges and unit rates.

o  Some businesses have been placed into inappropriate charging bands and should regularly review this to ensure they are being charges correctly.


If your business is paying high standing-charges, we can help by:

- Analysing your bills for incorrect charges

- Assessing whether your kVA capacity level is appropriate

- Reviewing the tariffs currently available across the market

- Providing bespoke strategies specific to your business


For more information on standing charges or any of the charges that appear on your bill, don’t hesitate to contact Seemore Energy today to speak to one of our energy experts for a free consultation.

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