Empty Commercial Property Standing Charges: Who Pays?

In commercial properties, the holder of the energy supply contract is liable for standing charges, even if the unit is empty and using no energy. In most cases this is the tenant while a lease is running, but it can fall to the landlord during a void period once the tenant has left and the supply reverts to them. A void period is simply the time a unit sits empty between tenancies. The lease and the supply contract together decide who pays, so check both.

Standing charges are a daily fixed cost on most electricity and gas supplies. They cover the cost of keeping the property connected to the network, providing the meter, and maintaining the supply, regardless of how much energy you actually use. Because they apply per day rather than per unit, an empty commercial unit still builds up charges for as long as the meter stays live.

Landlord or tenant: who is liable

This depends on two things: what the lease says, and who holds the supply contract at the relevant time.

• While a tenant is in occupation under a lease, they usually hold the supply contract and pay the charges directly.
• When a tenancy ends and the unit becomes vacant, responsibility for the supply often reverts to the landlord or property owner until a new tenant takes over.
• Some leases make the tenant liable for charges up to the end of the term, even if they leave early. Others pass the cost back to the landlord on the date the property is handed back.

Read the lease carefully and check the dates. If a tenant has left but the lease has not formally ended, the position can be unclear. Where there is doubt, get it confirmed in writing rather than assuming the other party will deal with it.

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Deemed rates on an empty unit

When there is no agreed contract on a supply, for example after a tenant leaves and no one has signed up, the supplier puts the property onto deemed rates. These are default terms that apply automatically because energy is still being supplied, or could be, and someone has to be billed for it.

Deemed rates are typically higher than agreed contract rates. The standing charge under deemed terms still applies day after day, so a void unit left on deemed rates can build up a meaningful bill over a few months for nothing more than staying connected. If you are the landlord and a unit has reverted to you, contact the supplier promptly to either agree a contract or arrange for the supply to be reduced or stopped.

Ofgem regulates energy suppliers and sets the framework for how deemed contracts work, but individual suppliers set their own standing charge levels within that framework. The Ofgem and GOV.UK websites explain the rules, and current figures are published there rather than being fixed at one rate.

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Capping, de-energising or disconnecting the supply

For a longer void, you can ask the supplier about reducing or removing the standing charge. There are usually a few options:

• Capping the supply, where the connection is physically limited so no energy can flow. This may reduce or remove the daily charge.
• De-energising the meter, a temporary measure that stops supply while keeping the connection in place. This is generally cheaper and faster to reverse later.
• Full disconnection, where the supply is permanently removed from the property.

There is a cost trade-off here. De-energising and especially full disconnection can carry a charge to action, and reconnecting later costs more again, sometimes considerably so. For a short void of a few weeks it is rarely worth disconnecting. For a unit that will sit empty for many months, the saved standing charges may outweigh the cost of de-energising and reconnecting. Ask the supplier for the figures both ways before deciding, and factor in how soon you expect a new tenant.

Disconnection also affects how usable the unit is when you market it, since a prospective tenant may want a working supply in place. Weigh that against the saving.

Tell the supplier promptly

When a unit becomes empty, contact the supplier as soon as possible with the date it was vacated and a meter reading. This keeps billing accurate and makes sure charges are assigned to the right party from the right date. Leaving it can mean the wrong person is billed, or that deemed rates run up unchecked.

If you cannot resolve a billing dispute with a supplier, the Energy Ombudsman can look at certain complaints once the supplier's own process is exhausted, provided the complaint qualifies and the right steps have been followed. Citizens Advice offers general guidance on energy billing and supplier complaints, and GOV.UK and Ofgem hold the current rules and figures. The rules broadly apply across England, Wales and Scotland, though some processes and bodies differ in Scotland, so check the position for the relevant nation.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Business Standing Charge Calculator lets you work out how much your business pays in daily standing charges over a year, for electricity, gas or both, even when a unit is empty. Try it now →