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Your Guide to Small Business Electricity

Tuesday, August 31st 2021

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Whatever company you run, and however many sites you have, the cost of small business electricity will always be significant.

In most instances, gas will be used to heat business premises such as offices, shops or cafes. Electricity, however, is more likely to power equipment, computers and lighting.

For both gas and electricity, you’re still likely to require separate contracts for each. Dual tariff contracts are typically reserved for domestic customers. However, some business energy suppliers may offer you a discounted rate to take both gas and electricity from them.

As a small business, it’s essential to keep your energy bills as low as possible. This is why it’s so important to be on a favourable small business electricity deal.

Microbusinesses

If your business is classed as a ‘micro business’, the rules on business electricity tariffs are different.

Microbusinesses are businesses that employ fewer than 10 people, with an annual turnover or balance sheet no greater than £2m. You also qualify as a micro business if you use less than 100,000 kWh of electricity a year.

As a micro business, you have more protection from energy suppliers than most larger businesses. There is also far greater flexibility when you switch between energy suppliers.

For businesses that qualify as a microbusiness, energy suppliers are obligated to:

  • inform you of the key terms of the energy plan before you agree to it
  • send you the energy contract with terms and conditions within 10 days, including all renewal terms for fixed term plans
  • include the new contract end date and the latest date that you can give notice to terminate on your bill if you have a fixed term plan.

Small business electricity suppliers

The ‘Big Six’ energy companies – British Gas, nPower, E.ON, EDF Energy, Scottish and Southern Energy and Scottish Power – all supply business electricity to microbusinesses and small businesses.

A number of smaller business energy suppliers now operate in this sector too. These include Haven Power, Good Energy, Clear Business and Yü Energy. At BusinessEnergyQuotes.com, we have 23 business energy suppliers on our growing directory – check them out here!

Payment for micro or small business electricity is simple. You can normally pay via:

  • monthly direct debit
  • with a credit or debit card
  • direct bank transfer
  • cheque on receipt of a bill

Electricity tariffs for small businesses

There are some significant differences in electricity tariffs between domestic and non-domestic consumers.

For example, business electricity contracts are usually longer, often between two to five years. Moreover, business electricity contract do not come with a set cooling-off period. This makes it difficult to switch suppliers once locked into a contract. Therefore, it’s essential for businesses to ensure they’re happy with the contract they’re on.

Electricity is priced in units. These are known as kilowatt hours, or kWh. Kilowatt hours refer to the power used for a period of time. For instance, a 1kW appliance used for an hour will use 1kWh.

For businesses, the unit prices for electricity are typically cheaper than for domestic energy. On top of this, businesses are able to negotiate on their quotes prices. More often than not, the larger the business, or the more electricity required, the cheaper the rate will be.

A business electricity bill does include other costs within it too. These include:

  • a standing charge
  • VAT (normally at 20% as opposed to 5% charged on domestic electricity bills) 
  • costs to maintain the transmission and distribution network
  • costs towards the Climate Change Levy

The graphic below represents a breakdown of the costs contained within an energy bill.

Figure 1: A Breakdown of Non Commodity Costs

Tariff types for small business electricity

For small businesses, electricity tariffs are usually either:

  • fixed – the unit price will stay the same throughout your contract
  • variable – the unit price could potentially rise or fall throughout your contract depending on the market

Some business electricity suppliers offer ‘green energy’ tariffs. This tariff will engage more electricity from renewable resources, such as solar power and wind farms.

Some tariffs can also come without a standing charge, so you only pay for the electricity consumed without a daily rate on top.

Deemed and rollover contracts

A deemed contract is enacted when a customer moves into a new site and uses gas or electricity before agreeing to a contract with the supplier.

A rollover contract is also not ideal. They are used if you don’t negotiate a new electricity deal at the end of your current contract. 

Both of these types of tariffs both involve paying very expensive rates for electricity – sometimes upwards of 80%. Avoid these contracts at all costs – they’re a waste of money.

How much does small business electricity cost?

There are many factors which will determine the price that you pay for business electricity. For example:

Type of business: any business that runs outside of peak hours is likely to be offered a lower price for their business electricity from suppliers.

Geographical location: cheaper energy tariffs are usually found in major cities due to scale.

Credit rating: the greater your credit score, the more likely a supplier will offer you a cheaper tariff.

Business size and consumption volume: the more energy that your business uses, the more likely you are going to be able to negotiate for a price that suits you.

Contract length: in some cases, business energy suppliers will offer cheaper prices for longer term business electricity prices.

According to the Department of Business, Energy and Industrial Strategy, non-domestic energy consumers spent the following on their energy:

Very Small Businesses: 17.16 pence per kWh

Small Businesses: 15.43 pence per kWh

Small/Medium Businesses: 14.33 pence per kWh

Medium Businesses: 13.22 pence per kWh

Large Businesses: 12.92 pence per kWh

Very Large Businesses: 11.82 pence per kWh

Extra Large Businesses: 11.77 pence per kWh

-Average for all businesses: 13.48 pence per kWh

How do I switch the electricity supplier for my small business?

You can switch supplier by looking for business energy quotes on a small business electricity comparison website such as ours.

When comparing prices and quotes on BusinessEnergyQuotes.com, all you need is a business postcode an current monthly spend. Thanks to BusinessEnergyQuotes.com, you can compare quotes in seconds and switch 100% online. There’s no need for a phone-call. You can see the best prices for you, from 23 business energy suppliers, in just a few seconds.

It’s a good idea to research a supplier’s reputation and customer service record before making a switch. To do this, simply visit our supplier directory here.

How does the switching process work?

The switching process is simple with BusinessEnergyQuotes.com. In fact, it only takes 10 seconds to search and 3 minutes to sign.

  • Enter business postcode and select meter from drop-down menu
  • Choose new offer based on your actual consumption
  • Secure your contract with an e-signature

Put money back in your pocket and get back to the things that matter to your business!

Finding your ideal energy tariff is a few clicks away

If you are considering a change of energy supplier, BusinessEnergyQuotes.com makes it fast and easy to do so. Our powerful price comparison engine gathers dozens of offers for you to consider and compare in seconds. You can filter deals out by supplier, term length or biggest savings. Choose the offer you want, enter your payment details and you are on your way!

BusinessEnergyQuotes.com not only helps you save on your business energy bills, but it provides access to your own Business Account Manager, where you can look after your contract throughout its duration. We will take care of the admin work and ensure that your business receives a fluid, hassle-free switching experience.

Compare better energy prices now!

Need help choosing a plan, or want to make an enquiry?

We are always available for any help and assistance you may need, or to answer any queries. Give us a call, or if you prefer email simply use our form.

Call us on: +44 (0)330 0300 200