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 increases 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 £70.94 in July 2021 to £969.64 by September 2023, an increase of 1,266.9%, and amounting to over £3,500 annually. The customer was reportedly unaware 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, though their complexity often confounds small business owners.

Unlike domestic consumers, these 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.“

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