Did you know that energy bills are going up because of increased wholesale costs? In fact, gas prices in Europe have doubled since the start of this year. This is because energy demand is higher than the supply which increases the price of both gas and electricity. So, you might be wondering why “standing charges” on your energy bill are also increasing too?
What are standing charges?
Standing charges are a fixed daily amount that customers have to pay, no matter how much energy you use. This charge covers the cost of supplying your property with gas and electricity. However, this does vary by region due to the different costs to transport power to where you live.
To customers, standing charges are a fixed daily amount that they have to pay, no matter how much energy you use.
Standing charges also go towards government schemes aimed at helping to reduce carbon emissions and fuel poverty. Then there’s connections to and maintenance of the energy network as well as service administration charges. It's a bit like the line rental you have for your phone, but for your energy.
Finally, the standing charge also covers maintaining and repairing the National Grid and carrying out essential upgrades as more people use renewable energy such as solar panels. The standing charge has also been used to cover the purchase of energy bought by providers who then close.
Like your unit price for energy, standing charge costs are capped but can change as the costs to maintain the energy network change.
Why have standing charges gone up so much recently?
The main reason is supplier closures.
Many energy suppliers have closed in the last 18 months. The remaining energy providers have taken on their customers and the costs of the failed suppliers have been shared across all the remaining suppliers in the market.
Did you know, energy companies buy energy a few years ahead? But, when a supplier fails, if the providers taking on the customers can’t or don’t want to buy the failed supplier’s pre-bought energy, it is paid for by the energy network.
Another big reason is more renewable electricity sources.
The National Grid is currently built to work from a small number of very large power stations sending electricity ‘one way’ from power stations to homes and businesses at predictable times, such as when most people are at work.
However, with weather-dependent renewable electricity sources, increasingly special equipment needs to be installed so power stations can know how much renewable electricity is being put into the National Grid throughout the day.
Talk to us if you are worried about the increase in energy bills
Our customer service team is here to help if you're concerned about the impact of the increase on your energy bills. If you're struggling to pay, please visit our help page to find out about how we can support you.
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Information correct as of 01/01/2023