Ofgem told rules on standing charges 'need to change' as energy bills soar

Ofgem has been urged to address a rise in standing charges that has seen energy bills for small business increase by as much as 13 times over three years.

The Federation of Small Businesses (FSB) has reached out to the UK's energy regulator urging it to take action in response to rapidly escalating standing charges paid by small companies, particularly those operating in more rural regions.

One business owner reported his daily standing charge jumping from 70.94p in July 2021 to an eye-watering 969.64p per day by September 2023.

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Standing charges are charged each day, regardless of an individual customer's energy usage. They represent part of the costs incurred for supplying energy to homes and businesses. Standing charges handle covering the "hidden" costs of establishing new network infrastructure as well as maintaining power in instances where energy providers fold.

However, while the cost of energy for domestic customers is regulated with the energy price cap, no such cap is imposed on the bills of small businesses.

Commenting on the situation, Tina McKenzie, FSB policy chairwoman, said: “We want Ofgem to do a thorough review of standing charges for businesses as well as consumers, for better transparency and to discern whether energy companies are behaving fairly towards their small firm clients.

“Small business energy customers behave in a way more akin to consumers than big businesses, lacking the resources, the expertise and the buying power necessary to get the best possible deal out of their energy suppliers.

“However, they do not benefit from anything like the same level of protection as that rightly available to