Understanding your energy tariff: standing charges and usage charges - TheGreenAge (2023)

Understanding your energy tariff: standing charges and usage charges - TheGreenAge (1)

Over the last couple of years, the Government have made a real effort to simplify energy tariffs. We have looked at these before – both electricity and gas – but since these changes we thought we should revisit the subject. We can give you an idea of how much energy you are using in your home and also find a way to move to a cheaper tariff.

So the main change is that all energy tariffs have two parts to them now. Let’s take a look at each of them in turn:

The standing charge

The first is the standing charge – this is a daily payment that you make for the right to have electricity or gas. This can vary hugely between energy companies but you are looking at a cost of between 10p and 30p for each one. So over a 12-month period this could contribute significantly to the energy bill you end up paying.

For instance, I am signed up to First Utility for both electricity and gas. The standing charge on my tariff for electricity 18.61p and for gas it is 16.01p. That means that it costs me £68 per year for electricity (£0.1861 x 365 days) and £58 for gas. This part of the bill is completely independent of how much energy you use on a day to day basis.

Understanding your energy tariff: standing charges and usage charges - TheGreenAge (2)

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(Video) Episode 2: Energy Tariffs Explained

The usagecharge

The second part of your energy bill is all about usage. Your energy usage is measured in kilowatt hours, or kWh for short.

If you look closely at the instructions of any electrical device, it will normally have a power rating which tells you how much electricity it needs to work – this is normally given in watts (W) or kilowatts (kW)(1000W = 1kW).

Of course, the amount of electricity it uses depends on how long it’s on for, and this is measured in kilowatt-hours (kWh).

The example all the energy companies use to help people understand this is that 1kwh of electricity is equivalent to a 40w bulb being on for 25 hours.

In our opinion this is a really terrible analogy, since more and more people are moving to LED bulbs and don’t even have a 40w bulb in their home. The numbers don’t mean much anyway!

Our example numbers are calculated for a (very bright) 10w LED bulb – this could be on continuously for 4 days and you would use 1kWh.

So how much does 1kWh cost?

    • For electricity you can expect to pay between 10 – 15p per kWh
    • For gas you can expect to pay between 2.5 – 4p per kWh

    This is why people tend to heat their homes with central heating systems if they have the option. Heating your home with gas is about 1/3 of the price of heating your home with electricity.

Going back to appliances – how much do they cost to run?

Remember that electricity costs between 10 – 15p per kWh, so if you know how many kWh an appliance uses you can simply multiply the two numbers.

(Video) Time of use Tariffs | #TheGreenAgeLive

Take for example a freezer – this may use might use 1-1.5kWh a day – so will cost you approximately 15p to run each day. A fridge will use less at just 1kWh so will only cost 10p a day.

Heating wise, a 2000w convector heater will use 1kWh in just 30 mins, so it will cost you 20p or more for every hour you have it on.

Tumble dryers are especially bad – sometimes as much as 3.5kWh per cycle. This is basically £0.50 per use, so if you have a washing line use it!

Understanding your energy tariff: standing charges and usage charges - TheGreenAge (3)

savEach time you use your electric oven it uses approximately 1.5kWh, so it will cost 15 pence or more. A gas oven uses about the same amount in kWh terms so is much cheaper to run, costing just 6-7p. An electric hob uses about 0.75 kWh per use, which will cost about 8-9p.

The actual kWh usage of all these appliances will vary based on their power rating, and the cost for using them will vary depending on your exact tariff charge.

Lets move back to the energy bill now then – what is an average energy bill?

Looking at the electricity bill first

According to DECC,the average yearly electricity usage for domestic properties in the UK is 3,800kWh.

So what would that cost per year? Well I am going to take my tariff details here – and I am with First Utility – and apply them to these figures. You can see all the tariff details in the table below:

Understanding your energy tariff: standing charges and usage charges - TheGreenAge (4)

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For electricity, my standing charge is 18.610p per day and the unit rate (so the amount I pay per kWh) is 12.065p / kWh.

Therefore the standing charge would be £0.1861 x 365 = £67.92

The usage charge based on DECC’s figures would be 3,800 x £0.12065 = £458.47

So the total ectricity bill is £526.39 based on my tariff rates.

Repeating the process for the average gas bill

The average domestic yearly gas usage is 15,000kWh according to this same set of statistics released by DECC.

Looking at the table above, with my tariff rates I would pay 16.010p per day for my standing charge and the unit price is 2.747p / kWh.

Therefore the standing charge would be £0.1601 x 365 = £58.44

The usage charge would be 15,000 x £0.02747 = £412.05

So the total gas bill would be £470.49 based on my tariff rates.

The Economy 7 tariff

The only exception to the above is the Economy 7 tariff. This is when you pay two different rates for electricity and is normally used when people have storage heaters installed in their homes. Basically, the electricity you use at night costs less than the electricity you use during the day. The cheaper electricity is usually available either from 11.00pm to 6.00am, 12.00am to 7.00am or 1.00am to 8.00am.

(Video) Episode 5: Ten Tips to Cut Your Energy Bills

>>> Learn more about the Economy 7 tariff <<<

The principles discussed are exactly the same – you still have a standing charge but you have two usage rates: the night rate and the day rate. You can apply the same techniques as before to calculate your bill.

Take these values with a pinch of salt!

It goes without saying that there is unbelievable variability within our housing stock in terms of size and heating system. Also there are people out there who like their home to be an oven even during the coldest winter days. Conversely there are also people who monitor their thermostat like a hawk and never let it go above 17 degrees.

As such the amount of kWh used by different homes really does vary a huge amount. There are two important points to take away here:

Shop around for better energy deals

Firstly all electricity/gas is the same regardless of the supplier you are with, so unless you have a particular affinity with an energy provider, don’t be afraid to swap! Paying less for both electricity and gas is a bit of no-brainer and there are fortunately now lots of different companies out there that offer this service completely free of charge. They do all the admin in the backend – all you need to do is take your closing meter readings and submit them.

>>> How to switch energy supplier <<<

The Government are really keen to push people to shop around for the best energy deals and in our opinion it really is 100% worth doing. It seems the message is sticking too – during 2015, 6 million people switched energy provider to get a cheaper deal! Typically, but not always, smaller energy providers can offer more competitive prices because they have lower overheads. Click on the link above and try USwitch – it literally takes two minutes!

Use less energy!

The other thing you can do is try to use less energy. This way, not only do you keep more money in your pocket, you are also doing your bit for the environment. There are loads of ways you can easily save energy in your home.

>> 100 Ways to save energy in the home <<<

Think we missed something? Do you have a different opinion?

Comment below to get your voice heard…

(Video) Episode 1: Solar PV, the Feed-in Tariff, and Energy Performance Certificates


How do I calculate standing charge? ›

All electricity and gas suppliers apply a Standing Charge to their tariffs. These will be detailed on their bill and any tariff information they present in terms of promotion of their offers and deals. The easiest way to view your charges is to check the 'Details of Charges' column on your bill.

How do you calculate energy usage? ›

As every engineer knows, energy calculation is straightforward. The unit of electrical energy is the kilowatt-hour (kWh), found by multiplying the power use (in kilowatts, kW) by the number of hours during which the power is consumed. Multiply that value by the cost per kWh, and you have the total energy cost.

Is standing charge included on smart meter? ›

Is there a standing charge for smart meters? Smart meters, if you're offered one, should be provided for free by your energy supplier. Having a smart meter will not increase the standing charge on your bill. Your smart meter tells you how much gas and electricity you use in almost real time.

What does CR mean on Shell energy bill? ›

If your bill shows a balance with a 'CR' next to it, you're in credit and have paid for more energy than you've used. If winter's on the way, you'll be in a better position to handle the bigger bills to come. If you don't see 'CR' next to your balance, it means you're in debit.

What is the daily standing charge on my electricity bill? ›

A standing charge is a fixed daily amount you have to pay for energy, no matter how much you use. It even applies to properties that are empty for part of the year – a holiday home, for example. It's added to most gas and electricity bills.

What is the cheapest standing charge for electricity? ›

Here are the average standing charges for gas and electricity:
  • Electricity standing charge ranges from 5p to 60p per day.
  • Gas standing charge ranges from 10p to 80p per day.

How do I calculate my energy costs? ›

To calculate energy consumption costs, simply multiply the unit's wattage by the number of hours you use it to find the number of watt-hours consumed each day.

How do you calculate energy charges? ›

Multiply kilowatts by the average amount of hours the appliance is in use. Multiply that number by 30 days to calculate the average kWh your appliance uses each month. Multiply that number by your kWh rate to estimate your electric bill for the month.

What uses the most electricity in a home? ›

Top five energy consuming home appliances
  • Wet appliances. Washing machines, dishwashers and tumble dryers account for 14% of a typical energy bill, taking the top spot in our list. ...
  • Cold appliances. ...
  • Consumer electronics. ...
  • Lighting. ...
  • Cooking.
Jan 14, 2022

Why has my electricity standing charge doubled? ›

Like other energy related social and environmental policy schemes, the Warm Home Discount is paid for through energy bills, rather than general taxation. And to ensure the schemes are paid for evenly amongst consumers, the costs are added to standing charges on energy bills.

Why have energy standing charges increased so much? ›

Standing charges are a daily fee applied to gas and electricity bills regardless of whether customers have used any energy. The levy pays for network, supply and distribution costs across the sector and, since last year, has been increased to protect customers whose supplier has ceased trading.

How do I read my energy bill? ›

This includes:
  1. Your name and address.
  2. The name of your energy supplier.
  3. A customer reference or account number.
  4. What tariff you're on for your gas and electricity. ...
  5. The tariff comparison rate. ...
  6. The amount of gas and electricity you have used in the past period covered by the bill (this could be a month, quarter or year).
Feb 8, 2022

How much energy credit should I have? ›

Check your credit balance regularly and ask for a refund if it gets too large.” Mark Todd, who runs rival switching site Energyhelpline.com, says no consumer should be running a credit of more than 20% of their annual consumption – but that is particularly true if they are signed up to a small firm.

What does a minus mean on my energy bill? ›

It would be a negative number if you owed money. b. If you pay your bill when you get it will usually be the amount you need to pay now. 3.

Is it better to have a cheaper standing charge or unit rate? ›

Should I Choose A Lower Unit Rate Or a Standing Charge? For households and businesses that use larger amounts of gas and electricity, it is beneficial to select a lower unit rate with a higher standing charge.

Why is my standing charge higher than the cap? ›

Energy distribution networks run the supplies of gas and electricity to homes and this cost can vary in different areas, which energy suppliers then reflect in the price. So the same supplier might charge a different unit price or standing charge from one are to another, even on the same standard variable tariff.

Is there a price cap on standing charges? ›

Yet there's no total cap on what you pay – instead, it's a standing charge and unit rate cap. This means if you use more energy, you'll pay more. This guide has the unit rates and standing charges region-by-region.

Are there any zero standing charge tariffs? ›

Furthermore, many green energy tariffs come with no standing charge, so you'll only pay for the energy you use. This makes them an excellent choice for those who want to be more environmentally friendly but don't want to spend a fortune doing so.

What is the difference between a standing charge and the cost of energy used? ›

A standing charge is added to most gas and electricity bills as a fixed daily amount that you have to pay, no matter how much energy you use. Your standing charge covers the cost of supplying your property with gas and electricity. Think of it as a line rental, but for your energy.

Will the standing charge increase in October? ›

What about standing charges? The freeze will only apply to unit rates rather than standing charges, which will stay as set by Ofgem for October 2022.

How do energy companies calculate usage? ›

Energy usage is calculated in kilowatt hours (kWh), sometimes also called 'units'. One kWh is enough to power a 100-watt lightbulb for 10 hours. Some other examples from around your home: fridge-freezer: expect to use 1 kWh in 26 hours.

Does leaving phone charger plugged in waste electricity? ›

If you want to know if a plugged-in charger uses energy, the straight answer is “Yes”, but that's not the whole story. The truth is that the consumption is negligible.

What three appliances use the most energy in your house? ›

Here's what uses the most energy in your home:

Cooling and heating: 47% of energy use. Water heater: 14% of energy use. Washer and dryer: 13% of energy use. Lighting: 12% of energy use.

What 3 appliances consume the most electricity? ›

Which home appliances use the most electricity?
  1. Heating and cooling: 45-50% The largest electricity consumer in the average household is your heating and cooling appliance. ...
  2. Water heater: 12% ...
  3. Lighting: 9-12% ...
  4. Refrigerator: 8% ...
  5. Washer and dryer: 5% ...
  6. Electric oven: 3% ...
  7. Dishwasher: 2% ...
  8. TV and cable box: 2%
Dec 20, 2022

Can you be overcharged for electricity? ›

If your energy bill is higher than usual, overcharging isn't out of the question. However, it might not always be the fault of your energy supplier. You could be overcharged simply because you haven't given a meter reading in a while, or because your meter is faulty.

Why are my bills higher with a smart meter? ›

Because any difference between the old estimate and the new accurate reading will show on the bill with your smart meter upgrade, it can appear as if the upgrade itself caused your usage to increase. When in fact the higher bill has been caused by past energy use that hasn't been accounted for.

Do smart meters give false readings? ›

Currently, smart meters use mobile networks to record your usage, which can be unreliable in some locations, especially if you reside in a remote area. This may result in readings not being sent, which may confuse your bills and those of your energy provider. Smart meters can be puzzling and unsettling.

Do smart meters affect your Wi-Fi? ›

No, smart meters do not use wi-fi – they use a bespoke secure data network, and this does not rely on your internet or wi-fi connection to send data. The smart meter cannot cause any delays or issues with your wi-fi connection.

How do I stop paying gas standing charge? ›

How to avoid standing charge fees? For those who want to stop the standing charge if they are being charged, despite not using gas, they can do so by having the meter removed and then closing the gas account.

Why has my energy bill gone up on a fixed tariff? ›

This increase is because the energy price cap, set by energy regulator Ofgem , is set to jump by 80 per cent to reflect rising wholesale energy costs for energy suppliers.

Is standing charge going up in October 22? ›

Average standing charges for customers on default tariffs will remain capped in line with the levels set (in Great Britain) by Ofgem for the default tariff cap from 1 October 2022 to 31 March 2023, at 46p per day for electricity and 28p per day for gas, for a typical dual fuel customer paying by direct debit.

What is the annual standing charge? ›

The standing charge is an annual charge included in your price plan. This covers the fixed costs associated with providing your gas and electricity supply.

Who sets the standing charge for electricity? ›

Who sets gas and electricity standing charges? Your energy supplier sets the level of gas and electricity standing charges that you have to pay, but Ofgem (and now the government) limits how much suppliers can charge.

How do you calculate cost per kWh? ›

total cost = number of units used × cost per unit

The cost per unit is set by the electricity company, for example 14.78 p per kWh. This means that each unit of electricity costs 14.87 p. An electricity bill has two important numbers: present meter reading and previous meter reading.

How to calculate the electricity bill? ›

The formulas you will need to know to manually calculate your electricity bill are:
  1. Watts = (amps) x (volts)
  2. Kilowatt-hours = (watts) x (usage) / 1000.
  3. Cost = (kilowatt-hours) x (electricity rate)
Dec 20, 2022

Why is electricity standing charge going up? ›

Standing charges are a daily fee applied to gas and electricity bills regardless of whether customers have used any energy. The levy pays for network, supply and distribution costs across the sector and, since last year, has been increased to protect customers whose supplier has ceased trading.

Is it better to have a higher standing charge? ›

For households and businesses that use larger amounts of gas and electricity, it is beneficial to select a lower unit rate with a higher standing charge. This decision needs to be made with your annual consumption to hand to ensure that this is the better deal for you.

Does everyone pay a standing charge? ›

In 2016, Ofgem removed the requirement for tariffs to have a standing charge following recommendations by the Competition and Markets Authority. However, though suppliers are no longer required to set a standing charge on their tariffs most still do.

Why are standing charges different? ›

The standing charge has always varied depending on where you live, due to different costs to supply homes with power in rural or more remote areas.

Is 40 kWh a day a lot? ›

As you can see, the normal kWh daily power usage for US households ranges between about 20 and 40 kWh per day. 50 kWh per day, for example, is an-above average daily kWh home usage.

How much does it cost to run a 1500 watt heater for 8 hours? ›

For example, running a 1,500-watt heater for 8 hours a day can cost an average of $1.92 each day. That means it will cost many users just under $60 to operate the space heater for 8 hours every day for an entire month.

How much does 500 watts cost per hour? ›

For example, a 500W fan heater will cost 17p to run each hour under current 34p per kWh rates (500/1000 = 0.5, then 0.5 x 0.34 = 0.17). In terms of how much it would cost your fan heater to heat a room, this would depend on a variety of factors.

How is electricity bill calculated with example? ›

and we know 1 kWh is equal to 1 Unit.. so if there is 1000 watts appliance used electricity for 10 hours then it means 10 units of electricity used.. if 1 unit is of 5 rupees then we can find out the monthly cost as.. 1000 Watts*10 Hrs*30 Days= 300000 watts/hour. Where is 1 unit = 1 kWh. Cost of per unit is 5.

How is electricity measured and billed? ›


Your electric bill is based on how much electricity you use during the billing period. Your usage for the month is measured in kilowatt-hours (kWh) and is determined by a reading of your electric meter. The utility records the current reading and compares it with the last month's reading.


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