Business Energy Vs Domestic Energy

Name: Business Energy UK
Telephone: +448004647677

Whether working from home or investing in business energy for a massive corporation, switching to business energy comes with its fair share of considerations, one of which is energy usage.

Unlike the majority of people, who leave their house as early as 6 am and don’t return until 6 pm, business energy is often on all day, every day. However, this isn’t to say electricity and gas business energy contracts are higher in cost per unit.

In this guide, we’ll discuss the differences between business energy contract and domestic energy contracts, the additional costs you will need to consider and how to find the best energy suppliers.

Which Energy Tariff Is Cheaper?

All in all, business energy tariffs are cheaper than domestic energy tariffs, particularly in terms of the average unit rate. The bigger the business, the less the unit rate will be. However, you need to consider more than the gas and electricity unit rate alone.

For example, additional costs businesses will incur that domestic energy customers won’t, such as VAT. Domestic energy tariffs are privy to just 5% VAT, while businesses energy tariffs must succumb to 20% VAT.

Other costs businesses must consider include CCL, which is also known as the Climate Change Levy. At present, this equates to a rate of 0.188p per kWh for gas and 0.541p per kWh for electricity.

Although the unit rates are lower for business energy tariffs, it is the additional charges you will need to take into consideration if you wish to find business energy cheaper. These costs can have the effect of pushing up costs on a whole. This is when shopping around for the best deal is a must.

It’s also important to consider other types of energy, for example, those using renewable energy will be privy to CCL and VAT exceptions, both of which could make a huge difference to your overall energy tariff, we discuss this in more detail below;

Businesses are not required to pay CCL charges on renewable energy usage.
Those who use less than 33 kWh of electricity on average per day and 145 kWh of gas per day are not required to pay CCL and will only be privy to 5% VAT. (To sum this up, this is equal to a total of 52,925 kWh of gas per year and 12,045 kWh of electricity – this is a vast amount more than domestic energy usage.)
Business customers who own business’ that boast a residential aspect are not required to pay CCL and will only have to pay a total of 5% VAT. This is true for those who own campsites, run B&B’s, or own a care home.

How Do Business Energy Contracts Differ From Domestic Contracts?

One of the key differences between business customers and domestic energy contracts is that businesses must pick a gas and electricity supplier for a set period. Domestic energy tariffs on the other hand tend to come in the shape of rolling energy tariffs and as such, there is no expiry date for domestic customers.

The supplier will continue to supply energy to domestic customers on their current tariff until the homeowner decides to switch or upgrade their domestic energy tariff.

Here are a handful of ways business energy and domestic tariffs differ:

Cheaper bulk energy

Business energy suppliers have the option to purchase business energy in bulk, which means the supply will last the entire contract duration. Domestic gas and electricity suppliers on the other hand will purchase energy month by month.

What does this mean? Business energy suppliers are privy to energy at a better rate, which the business owner is also able to benefit from. As we have mentioned, both VAT and surplus charges can increase business energy costs quite significantly, which is why it’s important to learn more about these additional costs first.

Longer & more complex contracts

The majority of modern-day businesses choose energy contracts that span a lengthy period - usually around five years. What does this mean? First and foremost, the price is often more competitive as the supplier can buy energy in bulk, thus lowering costs on a whole and making business energy cheaper.

One downside of this? It means the business owner is tied into the deal for a set amount of time, which is why it’s important for business customers to pick the best contract from the onset.

Price fluctuations

When you invest in business energy, you’re investing in a bespoke contract, designed to suit the needs of your company and staff. The cost of this contract will be a one-off fee that won’t (unlike domestic contracts) change throughout the year.

This gives business customers peace of mind when it comes to repayments, as there will be no proven fluctuations to deal with. To ensure you get the best energy tariff from the onset, visit https://www.businessenergyuk.com and request a quote within 60 seconds.

Wish to talk to an adviser? Call us on 0800 464 7677 and speak to one of our expert UK based business energy advisers.

No "cooling-off" period

Business energy contracts don’t tend to come with a cooling-off period. This means that when the contract is signed, no changes can be made. It also means commercial energy deals are privy to a set payment, rather than one that fluctuates, which often makes them cheaper than domestic energy on a whole.

For more information, read the electricity supply terms and conditions before making a decision on your business electricity to ensure you get the best business energy deals.

No contract termination

If you’re happy with your business electricity tariff, this will continue to roll over year on year without you having to lift a finger. It’s only if you wish to change your commercial energy tariff, that you will you need to terminate the contract when your tariff is up for renewal.

Higher VAT charges

VAT, or Value Added Tax, comes in the shape of a government tax, which is applied to all goods and services purchased or sold for consumption or use by individuals or businesses. In a nutshell, this means your commercial energy is privy to VAT, and as such, all companies are required to pay a percentage of VAT on business energy prices.

What Criteria Determines The Cost Of Business Energy?

When determining the cost of business energy there are many factors to take into consideration if you wish to source business energy cheaper, some of which we have listed below…

Location

First and foremost, you’ll be asked to provide your business postcode, this will determine which commercial energy contracts are available in your area.

Business type

You’ll then be required to detail your business type, this includes the size and nature of your business. This will allow us to provide a bespoke quote suited to your exact needs.

Contract length

Business energy bills tend to be cheaper than domestic energy tariffs as you’re tied in for the year at least. You may choose to take out a contract for longer, which can lower your business energy deal even further.

Demand profile

Understanding your business’ different energy demands is an important factor suppliers need to take into consideration as this will determine how much energy they purchase from the onset.

Business' credit score

This is an important factor commercial energy contract suppliers take into consideration. The better your business’ credit score, the more commercial energy deal options you will be privy to.

Which Energy Regulations Must Businesses Adhere To?

Grasping the ins and outs of business energy regulations in the UK can be challenging, to say the least, however, all companies investing in business energy must comply with these rules. There are numerous schemes and levies commercial customers will need to factor into consideration.

Factors to consider include:

CCL or Climate Change Levy fluctuations
MEES or Minimum Energy Efficiency Standards (this is something business landlords need to be aware of)
CRC Energy Efficiency Scheme
Updates to Ells or Energy Intensive Industries exceptions
ESOS compliance checks

Compare The Best Energy Quotes At Business Energy UK

When it comes to sourcing or switching business suppliers, this can prove a time-consuming project, especially if you’re managing a larger company or this is your first time switching to a business tariff. Thankfully, we’re here to help. We not only help you change suppliers, but we also help you to source the best, bespoke deal.

For more information, speak to one of our energy-savvy team today. All you’ll need to provide is your business postcode, this will allow us to run an energy comparison. You’ll then be met with a range of quotes, all from trusted suppliers. We’ll talk you through the various options available, to ensure you pick an energy tariff that is perfectly suited to your business.

Once you’re up and running, our services don’t stop there, we’ll go above and beyond to oversee the entirety of the switch for you, and we’ll manage renewals to ensure you’re privy to the best deals year after year. It is that simple! What are you waiting for? Get in touch with us today.

Frequently Asked Questions

Are business gas rates cheaper than domestic?

Figures published by the ONS showcase an impressive 3,403,000 people work from home today, this equates to 11.7% of the national workforce. With these figures in mind, there is a substantial amount of workers who could benefit from energy cheaper than domestic energy.

However, it’s important to consider more than unit prices alone before you make the switch. For more information on this, visit our homepage.

Why can't businesses terminate their energy contracts?

Once commercial customers have signed an energy contract with an energy supplier, they will not be able to cancel this contract, even if it hasn’t yet begun. Why? Business energy companies predict and purchase the energy they supply to companies based on the business' bespoke requirements and as such, incur an upfront cost when the contract is taken out.

Where can I find the best energy supplier for my business?

You can compare a wide range of business energy supplier options in a matter of seconds using the handy tool on Business Energy UK. Simply type in your postcode and you’ll be met with a range range of deals, all of which take your specific requirements into consideration.