Sharing the load: what is a standing charge and why am I paying it?

From April 2026, every UK business will pay higher “standing charges” just to stay connected to the energy grid. 

We’re betting many of you don’t even know what that charge is for, let alone why it’s rising.

Let’s fix that.

The TL;DR on standing charges

• Standing charges are in place to ensure the infrastructure sitting behind your socket continues to work, and your business stays connected to the main energy grid.

• These charges are rising to help fund an £80 billion overhaul of the UK’s energy infrastructure, starting April 2026.

• You can’t avoid them, but with RED™, you can understand them, track them, and ensure you’re not paying a penny more than you should.

The context

Recently, Ofgem signed off on a staggering £80 billion programme to overhaul the UK’s energy network. The programme is pegged to boost the country’s electricity capacity, while also sheltering energy consumers from volatile international gas markets.

Although an important long-term move for the UK’s energy sector, the plan itself is not without consequences. Namely, standing charges on your energy bills are going to increase as soon as April 2026. That means, businesses and homes are going to pay more for their energy in the short term to support this infrastructure upgrade.

What exactly is a standing charge?

Standing charges — otherwise known as “non-commodity costs” (NCCs) or “network charges” — show up on your bill whether you use a lot of energy, or none at all. They are a daily fixed fee that your energy supplier charges you to cover costs associated with: 

• Transporting electricity or gas through cables and pipes to homes and businesses

• Supplier business expenses, like paying for call centres

• Governmental and/or environmental schemes like the Warm Home Discount

Think of a standing charge like a line rental. You’re essentially paying for the right to access the system, and to have power when you need it at the flick of a switch. 

How do standing charges show up on business energy bills?

They appear as a fixed daily fee — often unnoticed, yet they make up a significant part of your bill. In fact, set by your energy supplier, these charges typically account for one fifth of your bill, and you’ll pay them in addition to the unit rates for every kWh of gas and electricity that your business uses.

What influences standing charges?

Standing charges are shaped by what it costs to keep the energy system alive. This includes things like: 

• Building new infrastructure (read above: Ofcom’s £80 billion programme)

• The day-to-day costs of maintaining the current system

• Balancing supply and demand (speaking of a balancing act, read this article)

• Policy decisions and government-backed schemes

• Global volatility caused by things like international conflict and geopolitical shocks

Toby Alozie, Product Manager at tem, puts it clearly:

“We’re essentially paying for the maintenance of these very complex engineering-heavy systems that keep the lights on. Think of it like road tax; the bigger your business, the more wear you place on the system, and the higher your standing charge tends to be.”

You can’t control these levers. But, understanding them puts you back in the room and asking the right questions. Ultimately, this empowers you to make more informed choices about what it is you’re actually paying for. 

Are standing charges really necessary?

Yes… and no. Simply put, standing charges offer predictability for suppliers because they help spread the costs associated with infrastructure and policy. In theory (emphasis on theory), they are designed to protect households and businesses from wild swings in usage-based pricing.

The reality, however, often doesn’t match the theory. How standing charges are spent is rather unclear, and people deserve transparency on where this money goes. When it comes to upgrading the UK’s infrastructure, for example, private firms will deliver the work, but we the public are funding it.

“If we’re paying more in standing charges to fund a better grid, then eventually, we need to see the benefit,” says Toby. “We’ve seen budgets ballon for investment projects like HS2. The public need to know: what’s the return on investment? Will our bills go down in five or ten years? What's the timeline, what’s the expectation? These are the questions we need to be asking.”

Ofgem has explored reforms to standing charges. In early 2024, for example, they called for views on standing charges, which prompted more than 20,000 people to respond. This resulted in a new price cap, which was established to help ensure prices are fair and accurately reflect the cost of energy.

While not a catch-all solution, the conversation around standing charges is growing, and for good reason. The UK’s competitive advantage hinges on producing low-cost energy, and to remain competitive and balance out these rising costs, we need to find alternative ways to reduce our businesses energy bills. If we fail to do so, we hinder our ability to lead in categories like global manufacturing or technological innovation.

How RED™ is helping to balance investment with oversight

While we can’t just scrap the standing charge, we can lobby for greater clarity and more control over where this money goes. 

That’s where RED™ comes in. 

RED™ is a new kind of energy utility service that gives people an easy way to access fair and transparent energy. Built on our proprietary pricing engine (which you can learn more about here), we offer businesses clarity into what they’re being charged, and why they’re paying for it. This gives you the power to question your bill, compare it, plan around it and push back on it, should you need to. 

Ultimately, we’ve built RED™ for businesses like yours because the more you understand the forces shaping your costs, the better you can navigate them. So, if you’re ready to take back control of your energy bill, get in touch with us and let’s explore how we can lower your energy costs, together.