When it comes to a standing charge on your business energy contract, you can decide to have one or not. But it can be tricky to determine whether or not you should choose an energy tariff with or without a standing charge. Today, there are a couple of energy suppliers that offer a no standing charge option. It’s also worth noting that business gas tariffs have no standing charges.
While one option can be ideal for certain types of businesses, you need to figure out whether standing charges for electricity may affect your overall business energy bill. Utility Bidder can help you understand what can be the right option for your energy contract. This article discusses the standing charges and how they work.
A standing charge
A standing charge refers to an amount of money that you need to pay for your energy supplier to supply your business premises with electricity and gas. It can cover the costs related to keeping your business premises connected to the energy network. You should remember that the regulations don’t allow a standing charge on energy tariffs, and there are still a few zero standing charge energy tariffs on the market.
A standing charge may be applied differently, but this depends on the type of energy contract you are on. For example, if your energy agreement has a standing charge, it can be applied on your energy usage regardless of whether or not you utilize energy.
Therefore, when you decide to choose the business energy package, you need to think about the unique circumstances of your business. This can include the opening times of your business, the energy usage of your business, and many more. These factors can affect the energy costs of your business.
One type of an energy tariff worth considering is a fixed term contract. A fixed term contract gives you the chance to lock in your electricity and gas prices over time. This can get rid of your fear of spiraling energy costs. You can be paying more money for a unit of energy your business utilizes on a fixed contract, but it can mean that you know the exact amount of money you need to pay each month.
Also, your energy supplier cannot increase this standing charge when there are wholesale energy market fluctuations. However, there is a risk that you can miss out on reduced charges when the energy market prices fall.
As explained earlier, there are a couple of energy suppliers that are now offering energy tariffs with zero standing charges. Regardless of this, it’s also a good idea to look at the costs, especially when you decide to compare your fixed-term gas tariff. A zero standing charge contract can sometimes have a higher energy rate, so you need to determine what this difference can be. It cannot always help you to save money when you choose a no standing charge energy contract.
Aside from this, you may need to pay an exit fee if you decide to switch energy suppliers when you have a fixed contract. The energy supplier can demand a termination fee, so make sure that you are pleased with the energy contract before signing on the dotted line.
Choosing a flexible or variable energy contract can be a good solution if your business uses a lot of energy. It can also mean that you are not tied to an energy contract for too long. In most cases, a variable energy contract can last at least 30 days, so this makes it easier to switch energy suppliers so that you can have a better tariff.
The standing charge on variable energy contracts can be easy to see on the energy bill. The energy supplier can increase the standing charge and the unit charge once the energy costs rise. This allows them to retain their margins.
Business energy customers
Business customers can pay different standing charges compared to what domestic customers may pay on their energy bills. This is because this charge is associated with maintaining the energy supply to your business premises, such as infrastructure. Therefore, this tends to vary depending on the energy usage. You should remember that your business can also be eligible for extra charges that include government levies to help lower carbon emissions.
The cost of the standing charge can depend on the type of energy contract you are on, the business size, and the amount of energy your business utilizes. To have a better idea of the amount of money you can expect to pay for your energy usage, you need to consult an energy broker. Most energy brokers have information related to the costs of business energy.
As explained earlier, you can decide to switch to an energy tariff that has zero standing charges. This means you can pay for the energy you are using. But you should note that your unit rate can be higher. Therefore, saving money can depend on where, how, and when you utilize your business energy.
There are advantages and disadvantages to zero standing charge tariffs. One of the good things about a zero standing charge is that you can pay for the days you use your business premises. Therefore, if the energy usage is low, then a zero standing charge tariff can provide you savings overall.
However, a zero standing charge tariff can attract higher unit energy rates, meaning everything you may use can cost you more money. You can get a better energy rate when you pass a specific threshold. Therefore, if your business utilizes a lot of energy, there is a chance that you can pay more money because of the higher unit energy rates that apply on a zero standing charge tariff.
In conclusion, because standing charges are no longer a requirement, many energy suppliers are now offering a variety of zero standing charges on gas tariffs. But if you are not sure whether or not your business can benefit from a zero standing charge tariff, then make sure that you contact a reputable energy broker for advice.