The ‘standing charge’ buried in your gas bill

What is the ‘standing charge’?

It is the fixed daily amount you have to pay for using gas and electricity. It must be paid no matter how much energy you use – even on empty properties.

What is it supposed to pay for?

The charge covers the cost of connecting to the network, as well as some basic maintenance and service costs. But it is hard to find any detailed information on this. What is more, the things it pays for – which include some Government subsidies and bailing out badlyrun energy suppliers – are proving ever more costly.

Where can I find my standing charge?

Buried somewhere in your monthly energy bill, you will find two figures – one standing charge for your gas and one for your electricity. Splitting it this way makes it look less harsh – but more people are starting to notice it as the charge increases rapidly.

How much do I pay?

It depends on your supplier and, more importantly, where you live. The average annual standing charge across the country is £273.17 – about 50 per cent more than 12 months ago.

Why has it risen so fast in such a short space of time?

The standing charge is the way the industry regulator Ofgem has decided to subsidise the cost of bailing out customers from around 30 energy firms that have gone bust. When another energy supplier takes on the customers of a failed firm, it is losing money in the current market because of high energy prices, and Ofgem believes the standing charge is the best way to allow firms to recoup costs.

So it has nothing to do with rising gas prices or the war in Ukraine?

No. We are simply paying through the nose for a lot of bad financial planning and bungled regulation.

Why I haven’t heard about this before?

When bills were relatively low, most of us may not have thought much about it. But with energy costs rising – and the standing charge surging too – people are starting to ask questions.

Is a standing charge fair?

In short, no. Each household pays – in broad terms, at least – about the same. But that means an elderly person living on their own could be paying the same as a millionaire hedge-fund manager in a £10 million mansion.

Is that the only unfairness?

No. Our analysis of the figures shows a shocking variation across the country. If you live in the North, your standing charge will be up to almost 30 per cent higher than it would be in London. The disparity makes a postcode lottery of the system and unfairly penalises people in the regions.

Why does it differ regionally?

It’s not entirely clear. What we do know is that regions where the population is spread out over rural or more remote areas are likely to pay more, the theory being that it costs more to maintain and service the network.