Hidden Costs of No Standing Charge Energy Tariffs?

The no standing charge energy tariff helps people save on their energy costs. It does this by getting rid of the daily standing charge on their energy bill. But, even though this might seem like a good option, it usually leads to higher unit rates for electricity and gas.

Households that use low energy or have homes left empty for long periods might gain some advantages. However, for many people, the cost of energy could go up with these plans. Before making a switch, it is important to know the hidden costs of no standing charge energy tariffs. This knowledge will help you understand how these plans affect your energy consumption.

How No Standing Charge Tariffs Work

Most electricity tariffs and gas tariffs come with a daily standing charge. This charge helps pay for the cost of providing the service.

• Maintenance of the energy network– This includes the cost of repairs to infrastructure, smart meters, and the operations of energy suppliers.
• Supplier costs– This is the cost to keep energy providers running, so they can provide a standard of service.
• Customer support & metering services– These are costs for managing prepayment meter accounts and assisting customers in switching suppliers.

With a no standing charge tariff, these costs still exist – they are just included in the unit rates.

Instead of paying a set amount every day, customers on these plans will notice:

• Higher unit rates per kWh for electricity and gas.
• Increased charges for high energy use (households using much energy or much gas might have to pay more).
• Possible penalties for energy consumption during peak times.

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Comparing No Standing Charge Tariffs vs. Standard Tariffs

To see the hidden costs, we can look at the standard of service and energy costs for standing charge tariffs and no standing charge tariffs.

Key Takeaway: People on a no standing charge tariff might pay higher unit costs.

Who Pays More with No Standing Charge Tariffs?

No standing charge tariffs can be a good option for some people. However, for others, they may lead to higher energy bills.

❌ Disadvantages of No Standing Charge Tariffs

1. High Energy Users Pay More

   • Households that use a lot of energy will pay higher unit rates.

   • People with dual fuel deals (gas and electricity) might notice their costs rise a lot.

2. Prepayment Meter Users See Higher Prices

   • A lot of prepayment meter users pay higher unit rates compared to those who use direct debit.

   • If standing charges are removed, it could raise costs even more for people who pay as they go.

3. Homeowners with Electric Heating May Have Problems

   • Properties using electricity heating systems might pay a significant amount more with this model.

4. Seasonal Energy Users Could Face Spikes

   • Holiday homes and second properties with low energy usage might benefit. However, in the winter months, they could have higher bills because of peak-time pricing.

How No Standing Charge Tariffs Affect Different Types of Households

Key Takeaway: Households that use more energy will likely notice that energy prices go up under this model.

What Energy Suppliers Say About No Standing Charge Tariffs

Major energy suppliers and industry groups like Ofgem, Energy UK, and Free Price Comparehave cautioned that getting rid of the standing charge tariff might lead to higher energy costs for many people.

🔹 Energy UK Statement:
“Moving costs from standing charges to unit rates does not lower the costs for energy suppliers. It just shifts those costs around. Consumers who use a lot of energy will end up paying more with models that have no standing charge.”

🔹 Ofgem Report (2025):
“Some people may benefit from a tariff with no standing charge. However, it is important for customers to understand how this could affect unit rates and prices in the long run before they decide to switch.”

How to Find the Best Energy Deal Without Paying More

If you are thinking about changing to a no standing charge tariff, look at different suppliers. This way, you can make sure you have a better deal.

Step-by-Step Guide to Finding the Right Tariff:

1. Use an Energy Comparison Service
2. Websites like Free Price Compare Savings let you compare electricity deals, gas tariffs, and dual fuel deals.
3. Check Unit Rates, Not Just Standing Charges
4. Be sure to look at the cost per kWh, not only the daily charge.
5. Consider Prepayment Meters & Usage Patterns
6. If you use a lot of gas or electricity, a low standing charge tariff might save you money overall.
7. Check Supplier Reviews & List of Energy Suppliers
8. Some energy providers have their own standing charge models. These models are different from the usual pricing.

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What Happens Next? Ofgem’s Energy Price Cap & Future Tariff Changes

The Ofgem energy price cap will keep controlling energy tariffs. This includes models with standing charges.

January 2025 Energy Price Cap Update:

• The next review of the energy price cap will decide if standing charge fees stay the same or are decreased again.
• Experts in the energy market think that the UK might have more suppliers providing low standing charge or zero standing charge plans in the future.

What to Expect Next Winter (2025/26):

If Ofgem takes away standing charges completely, then higher unit costs will be added to all energy tariffs.

Final Thoughts: Should You Switch to a No Standing Charge Tariff?

✔ If you use only a small amount of energy, you could save money because there are no extra charges.
❌ If your energy consumption is high, you will probably pay higher unit costs.

Before you switch, look at the amount of energy you use. Check different energy providers and use a trusted energy comparison service. This will help you find the best energy deal.

FAQs About No Standing Charge Tariffs

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