When receiving your business energy bill, you expect to only pay for what you used. But you have to consider zero standing charges and what it means for your business and its utility budget. Is it the best option for your business? You have to consider all information before making any drastic changes or switches.
Standing Charge
This charge can be found on your business’s energy bill under “daily unit rate”. It is a fixed amount that your business has to pay even if it is more energy than your business actually used. You have to pay this charge even if your business was out of service for that specific period of time. Your energy supplier charges your business this amount to cover their expense of supplying you with electricity and gas.
You have no say in what this amount should be, it is entirely the supplier’s decision. They are limited by the price cap limits so that the standing charge is not too expensive. You can make use of utility supplier comparison companies, like Utility Bidder, to help you look for the best zero-standing charge tariff for your business. The standing charge, however, depends on a few factors, including your business’s energy tariff, energy supplier, and business location. Depending on where your business is located, the standing charge could be higher or lower. This is because of the infrastructure that is involved in getting the energy to your business’s location.
The standing charge pays the cost of keeping your business connected to the energy network. The charge covers the use and maintenance of energy networks and their infrastructure, like pipes and wires, that transfer the power from its origin to your business. It also includes meter readings, no matter if you have a prepayment meter or smart meter. The charge also contributes to supporting government initiatives that aid poorer households, as well as environmentally sustainable emission projects.
If you get your electricity and gas from the same supplier, you will receive dual fuel energy bills. Whereas, you will get separate bills and standing charges if your business gets electricity and gas from different suppliers. Depending on your business’s energy supplier, your standing charge rate could be calculated on a daily, monthly, or term basis.
Zero Standing Charge Tariff
As the name suggests, zero standing charge tariff is when an energy bill doesn’t include standing charges. It is also known as no-standing charge tariffs. This means that you only pay for the electricity and gas that your business consumes. Keep in mind that these charges will be made up for in other parts of your energy bill. An energy bill with zero standing charges usually has a higher price for every energy unit.
If you would like to switch your business to an energy provider that doesn’t include standing charges on your energy bill, you can make use of utility comparison companies to help you find the best possible deal suiting your business’s needs. Most energy suppliers have no standing charge energy options, so you will have multiple options to choose from.
Zero Standing Charge Tariff and Business Energy Bills
There are a few things to help you consider which option is best for you. The amount of energy you use will obviously have an effect on your decision. Make a list of the costs on your business’s energy bill with standing charges and one without them. This will give you a better perspective on which choice is cheaper. Look at the customer service that your energy supplier provides. Make sure that zero standing charge tariffs are available at the location of your business.
Zero standing charge tariffs are actually more suited for businesses that don’t use a lot of energy, due to high unit rates. You will have to do a lot of research to make sure that zero standing charge tariffs are more beneficial for your business. If you have zero standing charge tariffs, but the unit rate is too high, then it might be better to simply pay standing charges. If your business is more season bound, and isn’t using a lot of energy per year, then zero standing tariffs might be a very good idea to consider. If your business uses a lot of energy and is open practically every day of the year, paying standing charges will be a better decision due to high unit rates.
Advantages and Disadvantages of Zero Standing Charge Tariff
There is no assurance that zero standing charges will reduce your business’s energy bills. It might actually have the opposite effect. There are pros and cons to switching your business over to a zero standing charge tariff. These can be invaluable in deciding whether to switch or not.
Advantages
Your business will only pay for the energy that it consumes. If the premises are often unused, you will save money on your energy bills. When your business has used a specific amount of energy, the cost per unit will drop. This is especially beneficial if your business is supplied by one supplier and located at more than one location. By only paying for the energy that your business uses, it is easier to make comparisons and calculations of tariff plans. It makes it easier to stay on top of actual energy prices.
Disadvantages
The cost per unit of energy is higher when your business is on the zero standing charge tariff, meaning that businesses with average to high levels of energy usage will not benefit from zero standing charge tariffs. In fact, your bills might even be more expensive. Your business’s location could be in an area where suppliers with zero standing charge tariff options are not available.
Conclusion
This article focuses on and explains standing charges and zero standing charge tariffs. It explains what standing charges are used for and why your business has to pay the charge. The roles of utility supplier comparison companies glance over. The effects of zero standing charge tariffs on business energy bills are discussed. The advantages and disadvantages of zero charge tariffs are analysed as well. According to the information in this article, zero standing charge tariffs are mostly beneficial for small businesses that are open part-time and according to season, while operating from more than one location.
