Before you embark on a business venture of sorts, one must first take into consideration that every business, big or small, solely relies on energy to operate seamlessly. If you’re already running a business, then you probably know by now that keeping your costs in check is very critical.
In order for you to be able to cut the cost of your energy bills, you must first consider acquiring help from business energy experts.
It is no lie that obtaining energy quotes online to compare prices is the way to go in terms of finding affordable and simple electricity rates and tariffs for your business and commercial establishments. According to Business Energy, the average unit price per kWh for UK-based businesses is 14.36p with an average standing charge of 28pence daily. Even so, it can still be quite tedious to determine how much you should actually be paying for your business electricity.
Unlike household/residential consumers, electricity plans for commercial enterprises are much easier to find. However, finding a plan you’re comfortable with while at the same time having reasonable rates—will all equate to the type of business you have and its geographic location.
Electricity rates can be quite an overwhelming sight to behold. If you feel like you are paying a significant amount than the average rates, switching to a different electricity supplier might be a logical move. We will get into detail as we progress further into this.
Below you can find a table displaying recent electricity rates and tariffs offered by leading UK-based energy distributors
|SUPPLIER||PRICE PER KWH
Please note that the prices listed above are based on non-half hourly contract and were published on March 30, 2020.
Comparing various business electricity tariffs in the UK
You can find the cost differences of current business electricity tariffs from different providers—the Big 6 included—below:
Catering solely to small businessess, British Gas Lite offers tariffs for as low as 12.40p per kWh with a 23.28p per day standing.
While their regular plan British Gas charges at least 12.94p per kWh and 27.97p per day standing.
Prices start at 14.10p per kWh and 25.00p per day standing.
Decently priced at 13.68p per kWh, but with a costly standing charge of 30p per day.
nPower offers tariffs as low as 14.00p per kWh and a 23.54p per day standing.
Priced at 13.24p per kWh with a standing charge of 26.43p per day.
The lowest tariff rate in the list comes SSE, priced at 12.44p per kWh with 25.57p per day standing.
Tariffs are as low as 13.02p per kWh with a daily standing charge of 20.23p.
Tariffs are priced at 13.15p per kWh and 29.85p per day standing.
Offers tariffs for as low as 12.69p per kWh and a standing charge of 22.64. Note that all their tariffs use 100% green electricity, making eco-friendly energy an accessible source.
Rates start from 13.11p per kWh with a 25.00p per day standing charge.
Tariffs priced at 12.94p per kWh with a daily standing charge of only 20.17p.
What is a standing charge and how will it impact my bill?
Having gas and electricity supply is already a service in itself. To simplify it further, you pay your energy supplier for giving you access to electricity. That fee is called Standing Charge and it is priced in pence daily.
A Unit Rate on the other hand, is the fee you must pay for every kWh of electricity you consume. It is priced in pence per kWh.
The Standing Charge and Unit Rate are the two key things you need to look out for when you’re finding the cheapest tariff rates for your business.
Depending on the size of your business, these average prices per kWh will help you determine your utility expenses
- Very Small: 16.09 p/kWh
- Small: 13.95 p/kWh
- Small/Medium: 12.44 p/kWh
- Medium: 11.51 p/kWh
- Large: 11.25 p/kWh
- Very Large: 10.01 p/kWh
- Extra Large: 9.68 p/kWh
- Average: 11.66 p/kWh
Source: UK Government
In conclusion, it is already too much for a small business to be paying rates higher than 13.95 pence per kilowatt hour, hence it is important to know what the average tariff rates are.
When should I switch to a different energy supplier?
It is important to check whether or not you have been paying more than the average tariff rate than usual. If you have never switched to a different energy provider before, doing so will make you realise that you have been overpaying for quite awhile.
Another thing to take into consideration is service. If you are currently signed under an energy supplier with poor or subpar customer service, then it might be time to switch to a much reliable provider.
Before switching to a different business energy supplier, however, it’s important to note that you must first terminate your existing contract with your current supplier and that all outstanding bills have been paid for if there are any. This will make your switch far from tedious.
Why am I paying so much for electricity?
There can be a number of reasons as to why your business electricity bills are off the charts – one reason being that the UK has the highest per kWh rates in the world.
Another probability could be that you are paying a hefty amount per kWh on a bad tariff precisely because you haven’t switched to a different supplier for a long time. At least 70% of businesses in the UK do not shop for energy regularly and choose to stick to the same contract for years to come. This usually leads to missing out on great deals and benefits. By getting a business quote, you will be able to tell how much you have been paying and that it is apparently possible for you to cut down those costs and pay less on a different tariff with a new energy supplier in the market.
Otherwise, if you think you’ve already scored a great deal but are still finding yourself paying quite a lot on energy, it could simply mean that you consume a lot of energy or are using appliances and equipment that are not efficient in energy.
Is it possible to get cheaper electricity rates?
Yes! It is possible for businesses to get cheaper electricity rates. In fact, comparing business energy quotes will help you determine what’s cheap and what’s not, while helping you score business electricity deals that won’t leave a dent on your company’s budget.
While it may be cheaper to switch to a different energy provider, the amount you’ll be able to save will still all depend on how much your tariff is with your current supplier and how much electricity you consume on a day to day basis.
There are two types of tariffs for commercial plans:
Fixed Rate Contracts
This type of business electricity tariff is much suitable for small businesses. As the title suggests, Fixed Rate Contracts charge a fixed price per kWh for an allotted period of time. Usually, these contracts last for at least 1-3 years depending on the supplier. This type of contract normally offers 60% savings below average rates.
Variable/Flexible Rate Contracts
Unlike Fixed Rate Contracts, Flexible Rate Contracts give you much more liberty to switch to a different energy provider. Prices to be paid under Variable/Flexible Rate Contracts may fluctuate depending on market activity.
Generally, these two types of tariffs are for establishments that are on standard Non Half-Hourly meters. Non Half-Hourly meters or NHH for short, is a ‘measurement class’ for SMEs and domestic premises.
How can I tell if my business has Non Half-Hourly or Half-Hourly meters?
You can determine the difference between Non Half-Hourly and Half-Hourly by how your usage is being measured. For NHH meters, electricity usage will be estimated manually on a monthly basis. Small to medium businesses are normally classified under NHH.
Half-Hourly or HH, on the other hand, automatically captures and computes your usage every 30 minutes and immediately relays the data to your supplier. Larger establishments with a demand of 100kW or over are required to use the latter, so that suppliers can provide them with more detailed and accurate energy use data as mandated by the P272 legislation.
To determine what type of meter you have, all you need is a copy of your electric bill. You will find a 23-digit code on your bill—this is called the S number or Meter Point Administration Number (MPAN). Do you see the first two digits of your S number? They indicate what Profile Class you fall under—this will easily help you distinguish what your Measurement Class is.
What does Profile Class mean? And how many profile classes are there?
Profile classes give you an idea of how much energy you will be consuming depending on your type of business, whether your business is home-based or if you manage a small/micro-business situated in a different premise. These classes will be solely based on how much power you use.
As of 2020, there are 9 Profile Classes (01-08 and 00) in the UK that consumers may fall under:
Profile Class 01: Domestic Unrestricted
Residential consumers and those that man their own businesses at home typically fall under this category. Business electricity plans aren’t really needed in this group, but it might benefit you financially nonetheless.
Profile Class 02: Domestic Economy 7
If you are a domestic consumer and you have an Economy 7 Meter installed, you will automatically fall under this category. You will (usually) be offered average day rates coupled with discounted night rates. If you have equipment or appliances that are usually left on during the nighttime, you’re in luck! This is ultimately cost effective and can benefit you and your money saving desires.
Profile Class 03: Non-Domestic Unrestricted
Businesses that are non-electricity intensive fall under this category. Generally, this class is for smaller/micro-businesses that don’t really require too much energy to run their businesses. Usually, Standard Single Charge per kWh is recommended for these types of businesses because energy providers can offer lower kWh rates.
Profile Class 04: Non-Domestic Economy
This class is similar to 02; the only difference is mainly those with Commercial or Business Plans fall under this category. This type of Profile Class also offers separate rates for both Day and Night for businesses who have an Economy 7 Meter installed, exactly like Profile Class 02.
Maximum Demand (MD)
Electricity intensive non-domestic users whose meter can determine peak demand for an allotted period fall under this class. A class can be classified by its Peak Load Factor or LF, which is the total kWh consumed within a given period of time divided by maximum demand (in kWh) as well as the hours used throughout the period.
Due to P272, however, businesses that fall under this category are required to switch to Half-Hourly Metering from NHH.
Profile Class 05: Non-Domestic Maximum Demand (MD) Customers with a Peak Load Factor (LF) of less than 20%
Profile Class 06: Non-Domestic Maximum Demand Customers with a Peak Load Factor between 20% and 30%
Profile Class 07: Non-Domestic Maximum Demand Customers with a Peak Load Factor between 30% and 40%
Profile Class 08: Non-Domestic Maximum Demand Customers with a Peak Load Factor over 40%
Profile Class 00: Peak load usage of electricity above 100 kW
Businesses that fall under this category are required to obtain Half-Hourly Metering due to the new P272 regulation. This is because larger enterprises consume the most electricity (with a peak load use of at lesat 100 kW or even more).
What is P272?
Energy suppliers are now required by the new P272 legislation to provide more accurate and detailed reports on energy usage through Automatic Meter Reading or AMR meters. This can be beneficial for larger enterprises as they get to acquire much more comprehensive data based on their energy usage and costs on a half-hourly basis.
Businesses that already use AMR meters will automatically be converted into Half Hourly meters. Those classified under Profile Classes 05-08 ‘Maximum Demand’ are affected by this change. So businesses (under 05-08 profiles) that still use Non Half-Hourly meters will be required to switch to Half-Hourly meters.
The Office of Gas and Electricity Markets (or Ofgem) wants to make certain that consumers pay based on the amount of energy that they use, hence the mandatory accuracy and transparency that can be seen through Half Hourly readings.
This is especially helpful as you will be able to see when you use your energy the most. This will make it easier for you to map your business consumption and understand how your energy costs and how it can be reduced.
Why are electricity bills for small businesses so much more expensive than larger enterprises?
Odd, isn’t it? Well, SMEs are proven to pay 7.00+ p/kWh compared to larger businesses. But why is that? Believe it or not, one reason why this occurs is because bigger companies acquire bulk discounts from energy providers. On top of that, larger firms typically seek help from energy brokers in terms of finding cheap tariff deals.
On average, small to medium businesses pay at least £5,000- £6,000 a year, 20% VAT included. That’s roughly 40% more than what larger businesses pay annually.
Don’t lose hope though. It’s still possible for small businesses to cut down energy costs. Like we mentioned previously, comparing business quotes and switching to a different supplier is one–and not to mention essential–way of cutting down costs. Doing this might even make you be able to save thousands; don’t disregard switching to a new provider as you might be missing out on cheaper, better deals for a timely period. This is a mistake often made.
Negotiation is also key. Try contacting your preferred supplier and ask them if it is possible to meet halfway. Disclose your energy needs.
Tips on how to regulate energy usage and make it more efficient:
1. Switch off appliances and equipment that are not in use such as computers, air conditioners, electricity outlets, among many others
Leaving your desktop or laptops on (while charging) still consumes a lot more energy than you think. It doesn’t matter if your appliances are idle or on standby. If you are not to be using them, it might be better to turn these appliances off instead.
2. Make fluorescent and LED bulbs your best friend
Fluorescent lights and Light Emitting Diode bulbs are known to use less energy than other types of bulbs. They may not be the cheapest of options, but think long term: they’re sturdy, they’re energy efficient and they last longer than alternative bulbs.
3. Choose the right air conditioner
While shopping for an air conditioner for your company, take into consideration how much energy a model uses. It’s also important to consider the size of your office/establishment, this way, it will help you determine the ideal size of your A/C. An inverter-type model is also recommended. Another important rule (we should all follow, domestic or not) is to replace your A/C filters regularly. This can lower its energy consumption by a mere 15%. Not bad, right?
Are electricity rates different in each region?
Good question. If you find a great deal in one specific region, that does not necessarily mean that their rates are going to be cheap all over the UK. This explains why we need your postcode to help you determine the best deals in your area!
This bit is quite self-explanatory: prices vary from region to region depending on convenience, location of plants, and infrastructure costs. It all boils down to this: the more providers pay for infrastructure and transmission costs, the more it’ll cost you as well.
For example: energy rates can reach at least 14.00p per kWh in London while in North Wales these rates may rise up to 16.00p per kWh.
Below you will find the average rates per region. If you notice, certain regions such as Scotland, South West England, and North Wales pay more per kWh as opposed to London, Yorkshire, and East Midlands.
There is a high probability that some regions have access to copious amounts of renewable energy while other regions, on the other hand, have less. There are cases where energy is high in demand in a certain region, however, energy providers might not have enough energy generating solutions hence the hike in prices.
Will I be able to save more if I switch to a new energy supplier?
It all really boils down to how much your current tariff costs and how much energy is being consumed. Not to mention the deals/contracts that are attainable within your region!
A standard business energy contract usually lasts around 28 days from up to 5 years, depending on the agreement. Like we discussed earlier, these rates can be either Fixed (a fixed price per kWh during the entirety of your contract) or Variable (fluctuating prices that depend on market activity).
Unlike domestic consumers, business suppliers obtain electricity in bulk. So if a business chooses to switch to a different provider prematurely, a huge amount of energy will most likely be put to waste. It is best to make the switch during your renewal window, which is at least 6 months before your current contract expires. That’s generally enough time for a business to shop around for energy and compare business energy quotes until they find the right one that suits their budget.
However, it is still highly likely that switching to a different energy provider will cut down your costs and save you thousands of pounds.
Believe it or not, new customers usually obtain the best deals as opposed to loyal consumers. So if you have been stuck with the same energy provider for a while, that “good deal” might not last very long. Of course, negotiating with your current supplier is an option, but it is also always possible to find a provider that offers cheaper deals.
Who is the cheapest energy supplier in the market?
Like we discussed previously, tariffs really vary based on the location of your business or the region it is situated in.
However, most of the time smaller suppliers can offer much cheaper rates but that doesn’t necessarily mean that their rates are cheaper elsewhere. There are also some cases where some suppliers focus on and cater to small businesses while others work solely with larger consumers.
Lastly, cheap electricity rates might not automatically equate to cheap gas prices. When shopping for energy, it is important to check both their electricity and gas rates because not all suppliers offer cheap rates for both. Comparing business energy quotes or hiring a broker can both be helpful in finding the right supplier with fair deals around your area.
Should I stick to the Big 6 in terms of tariff rates? Are the Big 6 the most reliable suppliers?
Although The Big Six (SSE, EDF Energy, British Gas, npower, E. ON, Scottish Power) provide 90% of energy in the UK and are notable for reliable service and stability, their tariff rates, however, can become quite costly (at times); smaller and independent firms (First Utility, Ovo Energy, Utilita, Utility Warehouse, Ecotricity, Good Energy, Octopus Energy, etc) tend to offer much cheaper deals.
Smaller energy providers literally live by the same rules as The Big Six, all thanks to Ofgem and their regulation system.
At the end of the day, it will all still depend on your preference.
Do businesses pay less for electricity than residential consumers?
It varies. But it’s mostly because they do not operate the same way.
Commercial and domestic consumers are both offered different contracts by energy suppliers. Business energy consumers also have very flexible contracts that flow with the market, giving them enough privilege to work around peaks, while residential customers experience price hikes on an annual basis. For hidden chargers, however, businesses are required to pay a VAT rate of 20% on energy, while domestic consumers pay 5% VAT. These normally hike up electricity prices on top of other reasons such as Climate Change Levy or CCL.
Commercial consumers have an ultimately high opportunity to strike great, market reflective and beneficial deals that equate to long term security
What is Climate Change Levy / CCL? How will this affect my electricity bill?
The CCL is an environmental tax which drives consumers into using energy more efficiently in order to reduce Carbon Dioxide CO2 emissions. You can find these CCL charges in your monthly energy invoice. This environmental tax is to be paid by industrial, agricultural, and commercial sectors while businesses that use minimal energy, charities engaging in non-commercial activities, and residential users do not have to pay the main rate of CCL.
According to the UK Government, larger businesses that are energy-intensive can get at least 65%-90% deduction on the main CCL rates for electricity and gas. That is, if you have entered into a Climate Change Agreement or CCA with the Environment Agency.
Essential things to note in terms of Business Electricity rates:
While being under a Fixed Term Contract will do wonders with cutting down costs, there are other important things to take into consideration that can help you find the right contract that works just right for your business: Energy usage, Half-Hourly Metered (HH) Plans, Meter/Electricity Supply Type, Renewable Energy, Rollover Contracts, and Contract Lengths.
As straightforward as this already is, the amount of energy you use plays a huge role on your electricity bill. Large Businesses use at least 100,000kWh a year while Medium Businesses consume 50,000 kWh at most. Small and micro-businesses use 25,000 – 15,000 kWh.
Half-Hourly Metered (HH) & P272 Plans
Businesses that classify under Profiles 05-08 are required to use Half-Hourly (or HH) metering which leaves an impact on the tariffs they pay.
Electricity Supply Type/Meter Type
Just like we previously discussed, the type of meter a business uses also impacts how much their tariffs cost.
Renewable energy, also known as clean energy, is made from natural, renewable resources or resources that can be renewed by nature (wind, sun, etc). This is great because it’s eco-friendly. Many providers now offer clean energy as an option! The only downside is that it may cost more than standard or non-renewable energy.
Suppliers may roll over your contract if you do not cancel or renew your contract prior to its end-date. This can lead to paying higher rates for energy.
Generally, an electricity contract (for businesses) usually lasts a year. There are, however, other suppliers that now offer at least 2-5 year contracts. It’s important to know when your contract ends before you consider shopping for energy.
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