Bills explained · 5 min read

Understanding unit rates and standing charges

Published 8 May 2026

A plain-English breakdown of the two charges that make up every UK energy bill: the per-unit rate for what you use, and the daily standing charge for staying connected. Explains how both appear on bills and comparison results, and how Ofgem's price cap affects them.

UK household energy bill showing unit rates and daily standing charges

What is a unit rate?

The unit rate is the price you pay for each kilowatt-hour (kWh) of gas or electricity you use. It's usually shown in pence per kWh. If your electricity unit rate is 26.11p and you use 10 kWh in a day, that part of your bill for the day would be £2.61, before the standing charge is added.

Unit rates vary by region, by supplier, and by tariff type. Under Ofgem's price cap from 1 July 2026, the typical Direct Debit unit rates are 26.11p/kWh for electricity and 7.33p/kWh for gas; but these are caps on standard variable tariffs, not fixed national prices. Fixed tariffs available through comparison platforms can sit above or below the cap rate depending on when you compare.

What is a standing charge?

The standing charge is a fixed daily amount you pay regardless of how much energy you use; even if your usage for the day is zero. It covers the cost of maintaining the network, metering, and a portion of supplier operating costs.

Under the July 2026 price cap, the typical Direct Debit standing charges are 57.19p/day for electricity and 29.04p/day for gas. Across a year, that works out to roughly £208 for electricity and £106 for gas in standing charges alone; before you've used a single unit of energy.

Why standing charges matter when comparing tariffs

Two tariffs with similar unit rates can have noticeably different standing charges, and vice versa. A tariff with a lower unit rate but a higher standing charge might suit a high-usage household, while one with a higher unit rate but a lower standing charge could work out cheaper for a low-usage household, such as a single person in a small flat. This is why the headline "estimated annual cost" figure on a comparison result is usually more useful than comparing unit rates or standing charges in isolation; it combines both based on your usage.

How these appear on your bill

Most UK energy bills show a breakdown for each fuel (gas and electricity) separately, listing:

Smart meter customers can usually see this breakdown in more detail through their online account or in-home display, sometimes down to daily or even half-hourly usage.

The standing charge rate (pence per day) and the number of days in the billing period
The unit rate (pence per kWh) and the number of units used
The total cost for each, before VAT
VAT, which is charged at 5% on domestic energy in the UK

Common questions

Why do I pay a standing charge if I'm away and use no energy?

The standing charge covers the fixed costs of keeping your property connected to the gas and electricity networks and maintaining your meter, which exist whether or not you're using energy. Some suppliers offer tariffs with a zero standing charge and a higher unit rate instead, though these are less common and usually only suit very low-usage households.

Are unit rates the same across the UK?

No. Unit rates vary by region because of differences in network distribution costs, and they can also vary between suppliers and tariffs even within the same region. This is why comparison results are based on your postcode.

Does the standing charge change if I switch supplier?

It can. Each supplier and tariff sets its own standing charge within the limits of the price cap (for variable tariffs) or its own pricing (for fixed tariffs). It's one of the figures worth checking when comparing deals.

What's the difference between the price cap and a "price guarantee"?

The price cap is set by Ofgem and applies to standard variable tariffs across the market. A "price guarantee" or fixed tariff is a commercial offer from a specific supplier that fixes your rates for a set period, regardless of what happens to the cap during that time.

How is VAT applied to energy bills?

Domestic gas and electricity in the UK is charged at the reduced VAT rate of 5%, which is automatically included in the unit rates and standing charges shown on bills and comparison results.