What makes a gas standing charge?

19 June 2018 By Adam Throup, Category Manager - Energy

Gas

It’s a question we get often in various forms – why has the standing charge gone up? What causes the standing charge to change? If I reduce my AQ will it reduce my standing charge?

In an ideal world it would be as simple as higher or lower AQs meaning higher or lower standing charges, however this isn’t always the case.

As a member of the gas YPO framework, your standing charge is made of four building blocks:

  • Transportation – 4 different charges for the transportation of gas from injection point to the meter
  • Metering – essentially the ‘rental’ charge for the meter on site
  • Meter reading – costs to cover the reading of the meter
  • Adjustments from the last year – reconciliation of missing charges, credits of money due back

As you can see – there are no management fees built in to this. Your standing charge is driven purely on what your meter is supposed to be charged. These are the elements of the daily charge, however to find out what drives the cost of each element we need to look a bit deeper.

The factors which can drive each of these costs are:

  • The AQ (annual quantity i.e. amount of gas allocated to be used by that meter within one year)
  • The SOQ (Supply Offtake Quantity i.e. max amount of gas allocated to be used by that meter within one day)
  • Meter size
  • Meter type
  • Meter Location
  • Meter read type
  • Meter read frequency

Where you might have a low AQ, this does not necessarily mean there is a smaller daily charge as there are many other factors which affect this such as the size of the meter, being a good one to rely on as an example. You could have a huge meter installed that isn’t using any gas – however the metering charges would still be substantial.


For further information on our Gas framework please contact Adam at 
[email protected]

Categories: Procurement , Energy

Leave a comment