Gas prices can vary significantly due to the unique needs of each business, making it difficult to provide a one-size-fits-all cost. However, you can take control of your expenses by focusing on the standing charge rates and price per kWh. Understanding these terms and knowing what constitutes a good rate is crucial for reducing your gas expenditure.

Standing Charge

The standing charge is a daily fee you pay to your provider for maintaining your gas supply. This charge typically covers the cost of gas supply pipes, meter maintenance, and meter readings.

While standing charges are generally less than a pound per day, securing the best rate can save your business hundreds of pounds annually.

Why Do Standing Charges Vary So Much?

The variation in standing charges depends on your gas usage. Businesses with low gas consumption might benefit from a lower standing charge, even if it means a higher unit price, as this could be more cost-effective overall. Conversely, businesses with higher gas consumption may find it more economical to pay a slightly higher standing charge in exchange for a lower unit rate. It’s essential to carefully review these figures to ensure you’re getting the best deal.

What About Zero or No-Standing Charge Contracts?

Zero or no-standing charge contracts mean you only pay for the gas you use, without a daily fee for access to the supply. While this might sound appealing, such contracts are rare and often only beneficial for businesses that operate seasonally. These contracts can help you avoid paying for gas during periods of inactivity, but you may face higher unit prices when your business is operational. It’s a trade-off that may work for some businesses, but not for all.

Price per Kilowatt Hour (kWh)

A kWh is a unit of energy measurement, and depending on your business, your gas usage can range from 500 kWh to over 1,000,000 kWh. Due to this wide range, suppliers often use a banding system rather than offering a fixed rate per kWh. By understanding your business’s gas consumption, you can compare rates within these bands across different suppliers and find the best kWh price for your needs.

Why Do kWh Prices Vary So Much?

Several factors contribute to the variation in kWh prices, including the amount of gas used, the source of supply, current market rates, contract dates, transportation costs, and even your business’s location. With so many variables, it’s crucial to understand your gas usage and current unit price to ensure you’re optimising your costs.

What Our Research Has Shown

Our team speaks to hundreds of business owners daily, and we’ve noticed significant variations in both standing charges and kWh prices. To explore this further, we conducted research with 10 businesses, ranging from a low-usage clinic to a high-usage construction firm.

Our findings revealed that standing charges could differ by as much as 163p per day, which could cost your business up to £594 annually in unnecessary charges. For businesses that could benefit from a zero-standing charge contract, the savings could be even more substantial over time.

When it comes to kWh unit prices, we found a difference of up to 2.456p per unit. For example, if your business uses 40,000 kWh of gas annually, paying 5.235p per unit would cost you £2,094 in unit charges. However, by shopping around for a lower unit price, you could reduce this to around £1,108—a potential saving of nearly £1,000 just by choosing a better deal. The results are clear: not shopping around for the best standing charges and unit prices could cost your business thousands of pounds unnecessarily.

This version aims to clarify and emphasise the importance of understanding and optimising both standing charges and unit prices to reduce overall gas costs.