Standing Charges Explained – Everything You Need To Know

The energy market is an ever-fluctuating one. The ever increasing demand for energy has resulted in a hike in energy bills due to wholesale costs.

Not only that, but the standing charges are also increasing significantly; you may be wondering what “standing charges” are on your energy bills. Then you are not alone. It’s important for you to know what each term on your energy bill means.

So let’s clear this confusion so that you can better understand your energy bill and thus your energy usage. Continue reading to find out all about what standing charges are and why they are increasing so rapidly.

What are standing charges?

Standing charges are fixed amounts for every day, which the consumer of energy will have to pay irrespective of the energy you use.

This fixed amount is basically the cost of supplying the energy to your property like you have a line rental for your phone; this is the same thing but for energy.

The cost for this varies from location to location due to different transportation costs. This fixed amount also pays for costs of maintenance of energy networks, connections to the energy network, maintaining and repairing the grid, important upgrades, setting up equipment, service administration charges, and government schemes.

These capped charges are fixed, but they can change with the costs of maintaining energy systems.

Why are they increasing significantly?

1) Closure of suppliers

During the last year, many energy suppliers have closed and failed after an increase in the wholesale costs, and the consumers had to switch their suppliers.

This means that a limited number of suppliers are providing gas and electricity to the consumers so that supply is not affected. And in turn, the suppliers take the extra share of grid costs, which they obviously charge from the customers.

Energy companies purchase energy beforehand. However, when the supplier fails, the Utility Bidder energy providers supplying energy to consumers do not or cannot buy this supplier’s energy bought beforehand, then this is paid for by the network.

2) Increase in the availability of renewable sources

the energy grid is built to accommodate the small number of huge power stations that send energy from power stations to homes and businesses in a one-way path. And the times are also known when the energy needs to be sent.

However, due to an increase in the renewable energy sources, installation of new and special equipment is required at power stations so that they can determine how much renewable energy is coming into the energy grid every day.

Is there anything you can do to keep your energy costs down?

You can compare tariffs from different providers to see who is giving good deals. To do this, you need to check the cost per kilowatt of energy usage and the standing charges to determine how much you will be paying every day for your energy consumption. But since standing charges are fixed, you cannot do anything about them.

What you can do is engage in energy-saving actions around your house to reduce costs. You can insulate your house to prevent heat and cold from escaping, use energy-efficient lighting, turn off lights and appliances when not in use, upgrade to energy-efficient appliances, etc.

In a nutshell

It is important that you understand the terms given on your energy bills to better understand the bills. This will help you in knowing where the costs are coming from and what you can do better to reduce your bills.

So if you are struggling with your increasing energy bills, then experts can help you out. They can help you understand different aspects of your energy bills and how you can reduce an impact on the energy bills.