SME energy standing charges are too high

Some SMEs’ costs have risen by more than 1000%. Nearly two-thirds of these businesses cite utility costs as a key factor driving higher expenses.

Small businesses in the UK are grappling with significant increased in fixed daily utility costs, escalating regardless of usage. Recent data shows that nearly two-thirds of these businesses cite utility costs as a key factor driving higher expenses.

The Federation of Small Businesses (FSB) reports that one small firm saw its daily standing charge soar from 70.94p in July 2021 to 969.64p by September 2023, an increase of 1,366.9%, and amounts annual charges over £3,500. The customer was reportedly not made aware of this dramatic rise.

Rural small businesses are particularly affected, highlighting a growing rural-urban divide and hindering efforts to support remote UK areas. Standing charges cover network infrastructure and policy initiatives such as the Warm Home Discount.

Unlike domestic consumers, businesses aren’t protected by an energy price cap, leading many to believe their costs are unjustly inflated.

The FSB said:

“SMEs can choose to limit their energy consumption to avoid paying higher consumption-related bills, but an increase in the standing charge places an inescapable financial burden on businesses merely for being connected to the grid.”

“Standing charges, in turn, become a regressive form of billing for small businesses, dampening their growth, confidence and ability to invest.”

Please contact 023 8202 7498 or email Nick Whitemore if you would like more information on the above.