As a small business owner, you might have noticed an increase in your energy bills recently. One of the main culprits of this has been standing charges, which are fixed costs associated with energy supply and have seen substantial increases recently. For businesses operating on tight budgets, these charges can severely impact their financial health.
We know that small businesses are facing a lot of financial pressures, with rising energy costs being a huge concern.
Understanding standing charges
Before we get into how you can reduce your energy bills, you might be wondering what exactly is a standing charge?
The rates you see on your energy bill are split: one will be your standing charge and one will be your unit rate. The unit rate is the amount you pay for every unit of energy that is used, which will be fixed or variable depending on your tariff.
Standing charges are the fixed daily costs incurred regardless of the amount of energy used. These charges cover the costs that the supplier incurs while delivering, managing, and maintaining your businesses energy supply. These costs include:
- Maintenance costs - This covers the cost of maintaining the infrastructure of the grid and the maintenance of any equipment that is needed for energy to work in your property.
- Transmission and distribution costs - These cover the cost of delivering energy from power stations to local distribution centres and then to individual properties.
- Metering costs - This includes meter readings, meter installs, and general meter maintenance.
- Administration costs - Your energy supplier will typically offer services such as a customer care team, account management and even some educational materials for you and your staff. Standing charges cover the cost of this service.
Why are standing charges rising?
Standing charges have risen for both domestic and commercial energy customers, however, the reasons vary between the two. Household standing charges started going up when a significant amount of UK energy suppliers went out of business at the beginning of the energy crisis.
The rise of business energy standing charges has come from a recent review made by Ofgem. The Targeted Charging Review was aimed at making sure transmission and distribution costs were charged in the fairest way possible.
Before the review, these costs made up a part of the unit rate and were based on how much energy a customer used. Ofgem deemed this as unfair as some businesses could avoid these charges by lowering their consumption at certain times whereas other businesses were unable to do this. Therefore, transmission and distribution costs are fixed as part of the standing charge.
When this review was first discussed it was supposed to lower the unit rate and make the standing charge more expensive which would even out on businesses energy bills.
Due to the global energy crisis unit rates for businesses actually went up at the same time as staining charges making business energy bills extremely high, forcing many business owners to change the way they run or shut down completely.
How can Resolve Energy help?
Fortunately, even with standing charges being high, there are ways that your business can ensure that you save money on your energy bills. One way you could do this is to work with an energy broker, such as Resolve Energy.
At Resolve Energy, we act as an intermediary between energy suppliers and businesses. The expertise and industry knowledge our team have allow them to negotiate better energy deals, negotiate for the best contracts, and provide tailored solutions to meet the unique needs of small businesses. Here are several ways in which we can assist in overcoming high standing charges:
- Negotiating competitive rates - We have established relationships with multiple suppliers, giving them access to a wide range of energy tariffs. We can leverage our market knowledge to negotiate competitive rates and secure deals with the lowest possible unit rate. By comparing offers from various suppliers, we ensure that small businesses are paying the lowest possible prices.
- Tailored energy solutions - Every business has unique energy requirements. Our team assesses the specific needs of a small company, considering factors such as energy consumption patterns, peak usage times, and operational hours. This tailored approach allows us to recommend energy plans that align with the business's actual usage, potentially reducing the impact of high standing charges.
- Switching suppliers - Switching energy suppliers can be a daunting task for small businesses. Our team of energy experts simplify this process by managing the entire switch on behalf of the company. We handle the paperwork, coordinate with suppliers, and ensure a seamless transition. By switching to a supplier with more favourable standing charges, small businesses can achieve significant cost savings.
- Monitoring market trends - The energy market is dynamic, with prices and tariffs fluctuating regularly. Our team continuously monitor market trends, keeping an eye on price changes and new offers from suppliers. This proactive approach allows us to advise small businesses on the best times to lock in rates or switch suppliers, ensuring they stay ahead of rising costs.
- Contract management - Energy contracts can be complex, with various terms and conditions that can impact overall costs. We thoroughly review contracts to identify hidden fees, unfavourable clauses, and opportunities for renegotiation. By optimising contract terms, we can help small businesses avoid unnecessary expenses and reduce standing charges.
- Providing expert advice - Navigating the energy market can be overwhelming for small business owners who lack the time or expertise to stay informed. Our account managers offer expert advice, breaking down complex information into understandable terms. They guide small businesses through the decision-making process, empowering them to make informed choices that benefit their bottom line.
High standing charges can pose a significant challenge for small businesses, but with the assistance of Resolve Energy, overcoming this hurdle becomes achievable. By negotiating competitive rates, tailoring energy solutions, and providing expert guidance, energy brokers empower small businesses to take control of their energy costs. In an environment where every penny counts, partnering with a business energy broker can make a substantial difference in a small company's financial health and long-term success.
If you're looking to save money on your energy bills then why not get in touch today? The relationships Resolve Energy has developed with over 24 of the UK’s biggest business energy suppliers allows our energy experts to source the best business energy rates available for your company right when you need them. Request a free quote today and start saving money on your energy.
