Forecast Shows Businesses Will Pay £208 Per Day in Standing Charges by 2030.
Standing charges on business electricity bills have increased sixfold since 2018 and are projected to rise even further over the next five years, according to analysts. The daily fees have surged from £31, which accounted for 3.2% of total energy bills, to £190 per day or 12.8%, as reported by consultancy firm Cornwall Insight.
This escalation means that businesses already burdened by rising National Insurance and minimum wage costs are now facing additional pressure from what many consider hidden fees. Further analyses reveal that British companies are paying the highest electricity prices among developed nations—four times more than their counterparts in the United States.
Cornwall Insight’s Business Energy Cost Forecast examined standing charges for typical small industrial consumers, including large retail and leisure establishments. In the 2020-21 period, before the energy crisis, such companies paid approximately £350,000 annually for electricity, with standing charges comprising £11,500 of this total. By 2022-23, electricity bills had tripled to £925,000. Although prices are beginning to decrease, Cornwall Insight predicts that by 2025-26, these businesses will still face electricity bills of £540,000, with standing charges amounting to £70,000.
Looking ahead to 2030, Cornwall projects that standing charges for these businesses will further escalate to around £208 per day, representing roughly 13.5% of their total energy bills. Standing charges are fixed daily fees added to energy bills irrespective of usage. They cover the costs of maintaining the supply network, supporting smart metering, and other initiatives. Unlike variable charges based on consumption, standing charges remain constant, limiting businesses’ ability to reduce their bills through traditional energy management practices such as triad avoidance—where activities are minimized during peak power cost periods from 4 pm to 7 pm.
Dr. Craig Lowrey, Principal Consultant at Cornwall Insight, commented, “The rapid rise in standing charges is making it harder for businesses to control their energy costs. Without action, it risks wiping out incentives to adopt smarter energy strategies and leaving businesses struggling to cut bills. It means rewards for shifting energy use to off-peak times, or reducing consumption altogether, are not as great as they have been.”
He further added, “Given that energy bills are already a significant strain on bottom lines, the standing charge levels are a further challenge to businesses and their ability to manage their energy costs and use, with potential impacts on their wider operations.”
The move towards higher standing charges is a result of Ofgem’s Targeted Charging Review, which has fundamentally changed how network charges and other system costs are collected. Previously, a larger portion of these costs was recovered through unit charges, allowing businesses that could reduce consumption and minimize usage during peak times to pay less. The revised system aims to ensure that businesses contribute a “fairer” share of the costs. However, critics argue that this shift discourages energy-saving and efficiency measures.
Cornwall Insight’s analysis coincides with a recent Ofgem decision mandating that all domestic energy suppliers offer tariffs without standing charges. Under this new regulation, households opting for such tariffs will incur slightly higher costs per unit of gas and electricity consumed, balancing the removal of fixed daily fees with variable usage charges.
In 2023, the cost of electricity for UK industrial users increased to 25.85p per kilowatt hour, according to recent data. This represents a substantial rise from 10.43p five years ago and 8.89p a decade earlier.
Moreover, UK industrial electricity prices have significantly outpaced those of European competitors and allied countries. For instance, the equivalent rates were 17.84p in France, 17.71p in Germany, and notably lower at 6.48p in the United States.
