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Business gas standing charges
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What is a business gas standing charge?
A business gas standing charge is a fixed daily fee that businesses pay as part of their gas bill, regardless of how much gas they consume.
The business gas standing charge covers the cost of maintaining the gas pipes and connections that deliver gas to your premises.
In this complete guide to business gas standing charges, we cover:
What’s included in a business gas standing charge?
The majority of business gas standing charges cover the cost of using the British natural gas distribution network and the gas meters installed at commercial properties.
On top of these underlying charges, business gas suppliers add a margin to cover their operating costs, which they collect from customers through monthly business gas bills.
In this section, we explain the three key components of business gas standing charges:
LDZ capacity charges
The British gas network is divided into 13 Local Distribution Zones (LDZs), which are regional gas networks operated by one of the following companies: Cadent, Northern Gas Networks, Wales & West Utilities, and SGN.
The operator in each region applies a standing charge for using their network based on individual customers’ peak daily gas demand.
A typical gas connection for a small business energy customer has an average peak demand of 117 kWh/day, for which a daily LDZ capacity charge of approximately 30 pence is paid.
National Transmission System (NTS) charges
The National Transmission System (NTS) is the high-capacity gas network operated by National Gas, which transports gas from production facilities in the North Sea or LNG import terminals to the regional distribution networks.
Gas shippers must pay a daily capacity reserve charge for each kWh of gas transported through the network.
For a typical small business gas connection, this charge equates to 3 pence per day but scales with the daily peak demand of your gas MPRN.
Metering maintenance and communication
Fixed metering costs cover the installation, maintenance, periodic safety checks, and manual meter readings of a commercial gas meter.
Modern smart business energy meters and advanced gas meters do not require manual meter readings but incur charges for the wireless communication of business energy consumption data.
Average business gas standing charges
The table below shows the average business gas standing charges for different types of gas connections.
| Commercial property type | Standing Charge | Annual Cost | Explanation |
|---|---|---|---|
| Domestic | 30 - 33p/day | £110 to £120 | Determined by Ofgem's quarterly price cap. |
| Small commercial property (U6 Gas Meter, 15,000 kWh pa.) | 30 - 70p/day | £110 to £250 | Similar distribution costs to domestic properties, but business gas suppliers have greater freedom over profit margins. |
| Medium commercial property (U16 Gas Meter, 50,000 kWh pa.) | £0.9 to £2.1/day | £330 to £770 | Distribution costs scale with connection capacity. |
| Large commercial property (U25 Gas Meter, 100,000 kWh pa.) | £1.7 to £4.0/day | £620 to £1,460 | Distribution costs scale with connection capacity. |
Source: Published 2024/25 LDZ and NTS standing charges.
For an index of these gas meter sizes, refer to our guide to business gas meter sizes.
Each business type has a large range because business gas standing charges also depend on location, tariff type, and the additional margin added by suppliers.
💡 Large industrial gas users will have much higher business gas standing charges. For example, a factory with an annual consumption of 20,000,000 kWh will pay LDZ charges of approximately £50,000 per year.
Business gas standing charges on different tariffs
The type of tariff you choose for your business gas supply has a significant impact on the amount of your business gas standing charge.
Although your tariff does not affect underlying distribution or metering costs, your supplier will adjust your standing charge based on the following factors:
- Multi-year fixed tariffs – Your supplier will account for annual expected increases in gas distribution costs, resulting in a higher business gas standing charge.
- Out-of-contract tariffs – Suppliers typically add a large profit margin to business gas standing charges for out-of-contract tariffs.
Why do businesses pay gas standing charges?
Business gas tariffs typically include a daily standing charge, with small commercial properties incurring a standing charge of approximately 30p/day. This is similar to the domestic gas standing charge under the energy price cap.
This fee represents the minimum fixed costs incurred for distributing gas through the gas mains network.
It is possible to get a no-standing-charge business gas tariff, but this is usually offset by a significantly higher unit rate.
Zero standing charges business gas tariffs
Zero-standing-charge business gas tariffs are business energy contracts that include only a unit charge per kWh of gas consumed.
In a no-standing-charge tariff, the supplier charges a significantly higher business gas price per kWh to cover the fixed distribution costs incurred.
As of January 2025, no business energy suppliers are offering zero-standing-charge business gas tariffs.
Strategies to reduce business gas standing charges
Unlike unit rates for gas usage, reducing business gas standing charges can be challenging since they are applied to any gas connection with the grid.
However, here we outline three strategies that businesses are using to reduce or eliminate business gas standing charges:
Gas supply disconnection
Disconnecting a business gas connection eliminates the need to pay a gas standing charge, which can be especially beneficial for companies with minimal gas usage.
Heat pump systems provide a more efficient way to heat properties compared to traditional gas boilers and do not rely on a mains gas supply.
When paired with a green business energy tariff, heat pumps can offer a completely carbon-neutral supply of hot water.
Reduce supplier margin
Business gas suppliers often add a significant margin to gas standing charges, particularly for renewal quotes.
Consider using our business energy comparison service or consulting your business energy broker to search the market for a more competitive tariff.
Ofgem regulations make it straightforward to switch business energy suppliers and take advantage of a more competitive tariff.
Gas meter capacity downgrade
Standing charges for LDZ capacity charges scale with the peak daily capacity of your business gas connection.
If the gas demand at your commercial property has decreased, it may be worth considering a downgrade in the size of your business gas meter.
While there is typically an upfront cost for a meter downgrade, it could result in significant long-term savings.