No Standing Charge vs. Standard Variable Tariffs: Which Is Better?

Understanding No Standing Charge and Standard Variable Tariffs

The UK energy market offers different energy tariffs. You can think about two primary options.

• No Standing Charge Tariffs– These tariffs do away with the standing charge. This means that customers only pay for the energy they use. But, they usually come with higher unit rates for gas and electricity.
• Standard Variable Tariffs (SVTs)– These are the main energy tariffs offered by energy suppliers. Prices change based on the cost of wholesale energy. The energy price cap set by Ofgem limits how much suppliers can charge per unit.

Ofgem’s energy price cap helps keep standard variable tariffs in check. This means customers won’t pay too much if they stay on their supplier’s default rate.

How No Standing Charge and Standard Variable Tariffs Work

No Standing Charge Tariff

A no standing charge energy tariff removes the daily standing charge. Customers only pay for the energy they actually use. However, suppliers increase the unit rates to compensate for this change. As a result, energy bills can feel less predictable.

✔   Best for: Homes that save energy, vacation homes, or places with renewable energy sources. ❌   Not ideal for: Houses that use a lot of energy. Higher unit rates can increase energy costs.

Standard Variable Tariff (SVT)

A standard variable tariff (SVT) is a type of energy tariff. With SVTs, the unit rates can change based on market conditions. This means it is different from a fixed tariff, where the prices stay the same. Under SVTs, there is no guaranteed fixed price. Customers can benefit from lower prices at times. However, they might also face higher rates if wholesale energy prices go up.

✔   Best for: Customers who want flexibility and do not wish to pay an early exit fee. This option is great for those who do not want to commit to a long-term contract.

✔   Provides peace of mind: SVTs allow customers to switch their energy suppliers without penalties. A fixed energy tariffmight charge an early exit fee.

✔   A good idea for some users: If wholesale energy costs go down, customers on an SVT can benefit from lower prices. Those on a fixed rate plan will keep paying the same fixed price.

✔   Works for various energy needs: This option suits homes with storage heaters, prepayment meters, or for customers who manage their electricity supply based on peak hours pricing.

❌   Not good for: People who want stable prices because unit rates can change based on wholesale costs.

❌   Higher chance of rising costs: If market prices increase, SVTs can be more expensive than a fixed tariff.

❌   Price differences by region: SVT costs can vary by postcode, with places like Scotland and England having different rates due to grid demand and rules from energy companies.

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Comparison of No Standing Charge vs. Standard Variable Tariffs

If you use a small amount of energy, a tariff without a standing charge might save you money. A standard variable tariffcould be a better option if you want some flexibility and do not want to pay an exit fee.

Who Benefits Most from Each Tariff?

No Standing Charge Tariff is Best for:

• Low energy users– These are people who use less than 2,000 kWh of energy every year.
• Second homes– These are homes that do not use a lot of energy.
• Prepayment meter users– These are customers who want to pay only for the energy they use.

Standard Variable Tariff is Best for:

• People wanting flexibility– There are no long-term contracts or fees to leave.
• Households needing stability– This is managed by Ofgem’s price cap, which lowers risks.
• Customers who want to switch often– It’s simpler to change energy suppliers when better deals are available.

Disadvantages of No Standing Charge and Standard Variable Tariffs

No Standing Charge Tariff Disadvantages

• When unit rates are higher, people who use a lot of energy may end up with bigger bills.
• In winter, heating costs can go up quickly. This is because gas and electricity are more pricey per kWh.
• There are not many choices available as few energy suppliers offer this tariff.

Standard Variable Tariff Disadvantages

• Energy prices can go up, causing customers to pay more when wholesale costs rise.
• This option is not the cheapest because fixed rate plans often offer better unit rates.
• There is less price stability, making energy bills hard to predict.

Impact on Energy Bills: No Standing Charge vs. Standard Variable Tariffs

Note: Prices come from Ofgem’s energy usage guidelines. They are right as of 21 February 2025 and are from Free Price Compare.

Which UK Energy Suppliers Offer These Tariffs?

Energy Suppliers Offering No Standing Charge Tariffs

• Utilita Energy – They provide choices with no standing charge for prepayment meters.
• E.ON Next – They have some no standing charge plans for people who use less energy.
• Regional Suppliers – What they provide changes depending on your postcode and pricing models.

Energy Suppliers Offering Standard Variable Tariffs

• British Gas – Their standard variable tariff has a price cap set by Ofgem.
• Octopus Energy – They offer a flexible standard variable tariff that has no exit fee.
• EDF Energy – They provide a standard tariff with discounts for direct debit payments.

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

January 2025 Energy Price Cap Update

• Ofgem’s price cap will determine the maximum price for standard variable tariffs.
• The review in April 2025 could change SVT prices and supplier rates.

October 2025 & Beyond

• More suppliers could offer custom tariffs. This may include options that have low standing charges.
• Fixed rate plans might become more competitive. This is due to wholesale prices stabilising.

Check Ofgem’s updates. Compare energy tariffs regularly to spot the best deals.

FAQs About No Standing Charge vs. Standard Variable Tariffs

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