No Standing Charge vs. Fixed Price Energy: Which Is Better?

The UK energy market offers many energy tariffs, but there are two main options that stand out.

• No Standing Charge Tariffs – These plans don’t have a daily standing charge. They often have a higher unit rate for each kilowatt hour (kWh).
• Fixed Price Energy Plans – These plans maintain the price of energyfor a specific time, like 12 or 24 months. This gives you certainty, but you may pay fees if you choose to leave the plan.

Both types of tariffs have benefits and drawbacks. It really depends on your energy usage, the length of your contract, and whether you use a prepayment meter or a smart meter.

Ofgem’s energy price cap keeps an eye on the rates of standard variable tariffs. This cap sets the maximum price that suppliers can charge customers who have not updated their plans.

How No Standing Charge Tariffs Work

A no standing charge tariff means you don’t have to pay a daily standing charge. You only pay for the amount of energy you use. But keep in mind, the unit rate for electricity and gasis often higher to help cover the costs for the supplier.

✔   Best for:Homes that use less energy. This includes second homes or homes with solar panels.

❌   Not ideal for:Households with high energy usage. They may face higher energy costs.

How No Standing Charge Tariffs Affect Bills:

Key takeaway: Tariffs without a standing charge can save money for people who use a small amount of energy. However, families that use much energy might pay more overall because of the higher unit rate.

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How Fixed Price Energy Plans Work

A fixed price energy tariff provides a steady rate for gas and electricity. This fixed rateremains the same for a set period, such as 12, 24, or 36 months.

✔   Best for:Homeowners who want peace of mind and certainty about their bills.

❌   Not ideal for:People who might switch soon. Many fixed energy deals have exit fees.

Key Features of Fixed Price Tariffs:

A fixed energy deal means you will have steady prices. But if you want to change companies before your contract ends, you may have to pay an exit fee.

Comparison: No Standing Charge vs. Fixed Price Energy Tariffs

You can save more on your energy bill by knowing how much energy you use. If you use a lot of gas or a lot of electricity, a fixed price energy plan might be the best choice for you.

Who Benefits Most from Each Tariff?

✅   No Standing Charge Tariff is Best for:

• Low energy users – These are people who use a small amount of energy each month.
• Second homes – These are places that stay empty for a long time.
• Solar panel owners – These homes make their own electricity and rely less on the grid.

✅   Fixed Price Energy Plan is Best for:

• Families and busy households – These are people who use a lot of energy.
• People wanting budget certainty – They like fixed rates for a certain contract length.
• Customers worried about changes in the energy market prices – Fixed plans can give them peace of mind.

A fixed energy tariff is a good option if you want to keep your bills predictable. If you don’t use a lot of energy, a no standing charge tariff can help you save money.

Hidden Costs and Disadvantages of Both Tariffs

❌   No Standing Charge Tariff Disadvantages:

• If the rates for units go up, energy users will pay more.
• Heating costs in winter could be a lot higher if usage increases.
• Not all energy providers offer this tariff, which means there are fewer options.

❌   Fixed Price Energy Plan Disadvantages:

• If you leave before your contract is over, you will need to pay exit fees.
• People on a standard variable tariff may pay less if the energy price cap from Ofgem decreases.
• If energy prices go down, you could pay more than the maximum price from new deals.

What to Expect in 2025: Ofgem’s Energy Price Cap & Market Trends

January 2025 Energy Price Cap Update:

• Ofgem reviews the highest price suppliers can set every three months.
• The next update on the energy price cap is in April 2025. This update could impact fixed energy tariffs and tariffs that do not have a standing charge.

October 2025 & Beyond:

• More energy suppliers may offer no standing charge tariffs if demand increases.
• Fixed tariffs might look better as wholesale prices stabilise.

Check energy deals regularly. Use a comparison service to find the best option for your postcode.

Which Tariff Should You Choose?

• A no standing charge tariff could be a good option if you don’t use much energy.
• A fixed energy deal is a good choice for you if you want fixed rates and peace of mind.

Check energy prices regularly. Compare different tariffs based on your energy usage.

FAQs About No Standing Charge vs. Fixed Price Energy Tariffs

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