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Business Energy Tariffs Explained

CHRIS RICHARDS | 26 JULY 2021

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No matter how big or small a business is, looking at ways to cut unnecessary costs is always a top priority - finding the right energy tariff is a great way to do this.

Finding a business or corporate energy tariff can be trickier than it would be for domestic customers because there are a lot more to choose from. To cater to all commercial enterprises, suppliers offer a lot more choices.

The good thing about having more choice is that you are a lot more likely to find the right tariff for your business's needs.

To make things easier for you, we'll explain all about energy tariffs available for businesses, the costs involved, and how you can compare business electricity prices if you plan to switch.

What exactly is a business energy tariff?

This kind of tariff is a plan that you will agree with your supplier for the energy supplied to your business. This will let you know the rates you will pay for your energy.

Your tariff will usually be worked out by the price per kWh and the daily standing charge amount.

A kWh (kilowatt-hour) is a way your supplier will measure your energy consumption. A kWh would work out how much energy it would take to run a 1,000-watt appliance for one hour. For example, if your business had a 100 watt light bulb in use for ten hours, this would take up 1 kWh of energy.

A standing charge is a fixed, daily charge for the supply of energy to your business property, no matter how much energy is used. You could compare it to a line rental charge that you may receive from a phone company.

The standing charge cost goes towards meter reading costs, connection to the energy network, and network maintenance.

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How much do business energy rates cost?

Energy rates will vary depending on the size of a business and its energy use. Business electricity rates for small UK businesses would tend to be higher per kWh than a larger company whose electricity usage exceeds the average.

Government statistics for the first quarter of 2021 show the average business electricity cost per kWh at 14p.

Depending on your business size, the rates will vary. Prices do tend to reduce the larger a business size gets.

The exception to this is for extra-large businesses, due to the extra work that would be needed to maintain the service. Their average rate would be closer to that paid by a small to medium company.

Below you can see the average business electricity rates in terms of business size in the UK from January, up to and including March of 2021.

  • Very Small = 16.80 p/kWh
  • Small = 15.10 p/kWh
  • Small/Medium = 14.16 p/kWh
  • Medium = 13.10 p/kWh
  • Large = 13.08 p/kWh
  • Very Large = 12.24 p/kWh
  • Extra Large = 13.43 p/kWh

What types of energy tariffs for businesses are available?

Finding the right business electricity tariff for your business's unique needs could help you save money, so it's always worth exploring what options are available to you.

Here are the most common business electricity tariffs that you will encounter when reviewing your energy supplier:

Fixed-rate

A fixed-rate tariff is when you agree on the rate you pay per kWh for a term between 1 to 5 years. The benefits of a fixed-term contract are that it will protect you against potentially rising energy costs. This is perfect if you know that electricity prices are low and want to lock in the price per unit.

It's also a great way to budget, as you can predict how much energy you will use and work out the costs from there.

Variable-rate

Variable-rate tariffs, also known as flexible tariffs, do not lock the customer into an agreed rate per kWh. Instead, your rate will fluctuate with the energy market.

Unlike a fixed-rate tariff, you wouldn't be able to work out your monthly costs - this will depend on the market. This is great if energy costs fall, as you will be paying a much lower rate. However, there is always the risk of prices rising.

Variable-rate tariffs also mean that you are not tied into the contract as you would be with a fixed-rate term. If there is a notice period for leaving, it will usually be around 28 days. We recommend checking any end dates or notice periods before agreeing to a contract.

If you do choose a flexible deal, it is worth noting that you will have to keep an eye on the market in case of any changes that could dramatically impact your energy costs. This can create extra work, so you will have to weigh up your options carefully.

Rollover contract

Rollover contracts come into effect if you have forgotten to cancel or renew your old energy contract by an agreed date. They automatically tie you into a new deal with the supplier.

Rather than cut off your supply, your supplier will instead move you to this different rate. These rates tend to be considerably higher than normal rates. If you have been moved on to a rollover contract, you may have to see out this contract until it ends.

It is always best to keep an eye on when your contract is due to end so you can renegotiate your terms or switch suppliers.

Rollover contracts are less common now but can still affect a contract that has not been cancelled following its end.

Deemed rate

Deemed rate contracts are very similar to rollover contracts, the main difference being that you can leave these a lot more easily, usually with a short notice period.

You will want to make leaving a deemed contract if you find yourself on one a priority, as you will most likely be paying much higher prices than if you were to switch suppliers or negotiate a new contract with your current supplier.

How do I choose the best business energy tariff?

We've made it easy to find and compare business electricity prices by using our handy comparison tool.

This allows you to compare business electricity prices for your business. In under 60 seconds, we can find the best tariffs based on the information you provide us with.

We work with the best UK energy suppliers. Hence, we are in a position to offer you the best electricity deal we can. Whether you are looking for green business electricity or seeing how much we can reduce your electricity bills, it's easy to use our comparison tool.

Frequently Asked Questions

It is quick and easy to compare business electricity prices with us. All we need is some basic information that you can find on your most recent energy bill.

We will then compare tariffs from the biggest UK energy suppliers and smaller, independent energy companies to make sure we find you the best deals.

Because we are completely impartial, you can relax knowing that we will find the best value for money tariffs for your business, making it easy to switch business electricity suppliers.

Business electricity prices are affordable as long as you take the time to ensure your business has the right deal.

In general, the energy rate for businesses will be lower than domestic rates because there is a higher consumption.

Much like bulk buying, the more energy your business consumes, the lower cost per kWh you can negotiate with your business electricity supplier.

Much larger businesses will negotiate the best rates, but it is worth keeping in mind that the higher VAT that businesses have to pay on their electricity will add to your costs.

By comparing rates using our comparison tool, you can be sure to find the best business electricity prices for you.

Are you sure you are getting the best price from your current business electricity supplier? If you are in any doubt, it will be worth considering.

Not only is our comparison tool completely free to use, but it is also quick and easy. You will be able to see the best deals from business electricity suppliers across the UK, from the major companies to smaller niche companies that can tailor their service to your needs.

Taking a couple of minutes to check the electricity deals via our comparison tool against the rates you are paying with your current supplier might be able to save your business a lot of money.

We just need a little bit of information that you can find on your latest business electricity bill to get started.

By providing us with information like your current business postcode, your current rate and supplier, and your average energy usage, we can do all the hard work for you.

We compare all the best energy deals for your business so you can check through them and find the offer that suits your needs.

This whole process takes less than a minute - imagine how long it would take to get this information if you had to call around every energy supplier in the UK to make sure you were getting the best deal!

When you are ready to switch your energy supplier, your new supplier will then take over the work, taking, on average, 4-6 weeks for completion.