Fancy paying between 26% and 105% more for your electricity than you need to? Of course not. Finding the best business electricity prices for companies has always been difficult. And, if you’ve found yourself on something called a deemed electricity tariff or you’re out of contract with your current supplier, your monthly bills will be far higher than they should be.
Alternatively, you may have found this page because your existing business electricity supply contract has come to an end and you want a better deal. We’re going to show you how to get how to negotiate the best business electricity prices for your company, no matter where it’s based and no matter how big or small.
In this article, we’ll share with you:
- What a deemed tariff is and why you should do everything you can to avoid them
- Why out of contract rates might be just as bad…or even worse
- How much you’ll pay on a deemed rate compared to a standard rate
- What the average unit price for electricity is and how it varies according to your location and usage
- Should you go for a fixed or a variable tariff?
- What you need to know if your contract end date is approaching
- What information you need to supply to a broker or an energy company when you’re getting a quote
- Whether you should look for a business electricity deal yourself or work with a broker
- The key points you need to know when negotiating a business electricity supply contract
- How to come to the right decision about a supplier
- The most frequently asked questions about business electricity including original research on whether prices do rise year after year or not.
With dozens of suppliers and hundreds of brokers, navigating your way through this complex market to find the contract with the cheapest business electricity prices for your company is a challenge.
By filling in the form at the top of this page, we can help you – sometimes our team manage to save clients up to 40% on their current in-contract business electricity prices.
We’ll aim to present you with 3-4 quotes explaining the advantages and disadvantages of each so that you have all the information you need to make the best decision for your company. Our service is free and there’s no obligation to take up any quote that we find for you.
If you’ve just moved into new premises…
If you’ve just moved into new premises and you’re using the electricity but you’ve not signed a contract yet, you’ll be on something called a “deemed” tariff. According to OFGEM, 25% of electricity and gas microbusiness meter points are on default and deemed contracts.
Because the old tenant or owner of your new property was previously in a contract with a particular electricity company and no contract exists yet between you and a new supplier, it’s still the old tenant or owner’s supplier which delivers electricity to your premises.
It’s that supplier’s name which is registered to the MPAN at your premises (more on that later) so they have the right to bill you for any electricity you use.
Deemed tariffs almost always cost a lot more than standard electricity tariffs – but how much more?
How much would your company be paying on deemed rates?
According to OFGEM figures, the average micro business consumes 10,000 units of electricity a year. In the table below, we show you what the cost of electricity supply would be for a month using these supplier’s deemed rate tariffs.
Whereas Bulb’s deal is very good, the vast majority of suppliers’ deemed rate tariffs mean that you’re paying a lot more for your electricity than you should in a year.
To give you a rough indication of how much more, the average in-contract monthly electricity supply cost should be in the region of £131. Compare that with the figures below:
|Standing charge||Unit rate||Monthly charge||Monthly units||Total|
|Green Network Energy||£0.50000||£0.20000||£15.50||£166.67||£182.17|
|SSE Business Energy||£0.54000||£0.23340||£16.74||£194.50||£211.24|
Understanding what’s on this table
- Supplier – the name of a UK business electricity supply company.
- Standing charge – the daily standing charge for that supplier’s deemed tariff.
- Unit rate – the cost of a unit of electricity on that supplier’s deemed tariff.
- Monthly charge – the figure in the standing charge column multiplied by 365 and divided by 12. This gives a figure on an average month’s standing charge on that supplier’s deemed tariff.
- Cost of consumed units – 625 units of electricity on that supplier’s deemed tariff.
- Total – the monthly charge and cost of consumed units column added together.
What if your current contract with your supplier has ended?
If the end date has passed on your current business electricity supply contract, many energy providers will continue to supply you but they’ll change the price they supply you at because this is no longer covered by the original agreement.
The out-of-contract tariff is often priced at the same rate as the deemed tariff meaning that, when you receive your first bill, you’re likely to see quite a jump in what’s taken out of your business account on direct debit.
Even worse is the rollover tariff
Again, if you fail to come to a new agreement with your existing supplier or if you haven’t switched to a new provider, some business electricity companies will then subscribe you automatically to their rollover tariff.
You will be stuck in this contract for at least a year and the prices you’re paying, although often not as high as deemed tariff or an out of contract tariff, will increase. In most cases, there will be little or nothing you can do to leave the contract without facing a substantial early termination payment.
If you run a microbusiness, your electricity supplier must notify you 60 to 120 days prior to the end of your contract. In their notification, they must send you details of their renewal tariff or, if they intend to subscribe your business to a rollover tariff, details of their rollover tariff (contract duration, standing charge, unit prices, and so on). When you receive the letter from your supplier, you have a given timeframe in which to respond to them indicating whether or not you wish the contract to be renewed or rolled over.
Legally, what are classed as “microbusinesses” cannot be placed onto a rollover contract with a duration of more than a year. If your company is not classified as a microbusiness, your supplier is under no obligation to write to you to let you know about either their renewal contract or rollover contract.
BusinessCostSaver tip – a microbusiness is defined by OFGEM (the governing body overseeing the electricity and gas supply sector) as a company which:
- has 10 or fewer staff
- has an annual turnover of €2 million or less,
- has a balance sheet of €2 million less
- consumes less than 100,000 kWh of electricity per annum, or
- consumes less than 293,000 kWh of gas per annum.
For your company to be classed as a microbusiness, you need only meet one of the above five criteria. Microbusiness energy bills (for both gas and electricity) generally never cost more than £24,000 over the year (before VAT and Climate Change Levy charges).
What’s the average unit price for business electricity?
There is no average unit price for business electricity in the UK but there are a number of benchmarks you can use to determine whether what you’re paying or what a potential new supplier is offering you represents good value for money.
Electricity is cheaper in certain areas of the country and, if you consume a lot of it, the quotes you receive will be lower per unit – sometimes substantially lower.
As a guideline, the average electricity bill for an average UK business over the course of a year is around £3,050.
We examined recent data produced by OFGEM to determine how what you pay varies according to usage and geographical location.
Are smaller businesses penalised on price?
Very small businesses pay 56% more for their electricity than extra large industrial users. Small businesses are responsible for over 90% of all economic activity in the UK and they pay 38% higher unit rates than the largest private sector consumers of electricity.
|Size of business||Minimum consumption||Maximum consumption||Pence per kWh|
|Very Large||70000||149999||10.20||34.08% cheaper|
|Extra Large||150000||and above||10.09||34.81% cheaper|
Do some regions get cheaper electricity than others?
There are regional differences in the prices paid by both business and domestic customers for their electricity according to regular annexes published by the Department for Business, Energy and Industrial Strategy.
Businesses in Northern Ireland pay the lowest amount for their electricity (12% lower than the average UK price) whereas businesses in the North of Scotland pay the most.
Generally, the further that electricity has to be transported, the greater the number of infrastructure providers which have to be paid – this is reflected in the cost. Northern Ireland enjoys the rates that it does because there is an all-Ireland electricity market and the island of Ireland is much smaller in size than the UK mainland.
|East Midlands||£96.25||3.75% cheaper|
|London||£100.90||0.90% more expensive|
|Merseyside and North Wales||£105.42||5.42% more expensive|
|North East||£99.03||0.97% cheaper|
|North Scotland||£108.33||8.33% more expensive|
|North West||£99.10||0.90% cheaper|
|Northern Ireland||£88.83||11.17% cheaper|
|South East||£101.94||1.94% more expensive|
|South Scotland||£97.01||2.99% cheaper|
|South Wales||£104.65||4.65% more expensive|
|South West||£107.92||7.92% more expensive|
|West Midlands||£98.96||1.04% cheaper|
Electricity for businesses with a poor credit rating
Prior to offering you a final deal, many electricity suppliers will run a credit check on your company. The more adverse financial information they find on your company, the higher the unit price and the daily standing charge are likely to be.
If your business has a poor credit rating, you will almost certainly be asked to pay monthly by direct debit. Some suppliers may also require you to place a deposit with them to the value of up to three months’ expected supply costs.
Fixed or variable tariff – which should you go for?
There are six main types of business electricity contract that your business might be offered – variable, fixed, pass-through, green, half-hourly, blend & extend, and flex.
Variable business electricity tariff
With a variable business electricity tariff, the price you pay for each unit of electricity consumed will go up or down in line with the wholesale market. Sometimes, depending on the procurement and generation policies of your supplier, a fall or rise in their prices as a result of movement in the wholesale market may happen immediately or it may be delayed for a few months.
Most variable business electricity tariffs do not tie your business in for any more than 30 days. There also generally tends to be no exit fees charged to companies wishing to terminate their supply.
A word of warning though – many variable deals start with introductory rates. In addition, many newer energy suppliers suppress margins as much as possible in order to encourage as many businesses to sign up to their service as they can.
Therefore, the rates your business pays on a variable contract can go up and down not just because of changes to wholesale prices but also as a result of a commercial decision by a supplier to increase their profit margins.
Fixed business electricity tariff
With a fixed business electricity tariff, you will pay the same price for every kWh of energy consumed while under contract.
When you’re doing your costings, you will have a much better idea of how much your company will be paying for its electricity contract for the length of your agreement.
Your company will experience an ongoing financial disadvantage if you agree a fixed business electricity tariff at a time when wholesale energy prices are higher. If there is then a 10% or 15% fall in the wholesale price, you will not benefit from this at all. Of course, if there is a 10% to 15% increase in wholesale prices, your business will be protected from that.
The margin between what your supplier pays for electricity and what you pay for electricity is also likely to be a lot bigger than on a variable business contract. This is because they, like you, have no idea of the general direction of travel over the medium- and long-term for wholesale prices and they have to build in additional margin just in case the market goes against them.
Fixed contracts can be as short as 6 months and as long as 5 years. If you need surety of supply, a longer contract may be a good thing. However, if you are expecting any major changes to your size or structure of your business within the period of the contract (for example, an expansion within your existing premises), will the contract you sign that you feel is right for your company now still be right for your company in a few months’ or years’ time?
Depending on your supplier’s terms and conditions, they may not release you from your contract under any circumstances or, if they do let you out, you might be hit with a hefty termination fee.
Remember that not all electricity suppliers provide good customer service – on longer contracts, you might be stuck with a thoroughly useless customer services team who rarely pick up the phone or respond to an email and, on the rare occasions they do, they’re incapable of helping you in a satisfactory way.
As we mentioned earlier, if you’re not running a microbusiness, your supplier will be under no obligation to inform you of your contract end date and there may be a roll-over tariff option built into their T&Cs.
Please always remember your contract end date no matter what size of business you run – we’ll tell you how to use that to your advantage later on in this article.
Pass through business electricity tariff
Many fixed business electricity tariffs have a “pass through” clause allowing them to increase both the daily standing and unit charges your company pays if their costs go up.
Which of their costs might go up? It could be the cost of the infrastructure used to get electricity to your premises, transport costs, or government-originated green levies.
On the plus side however, your daily standing and unit charges will be lower on a pass through contract than on a fixed price contract. That’s because you’re essentially allowing your supplier to vary what you pay so that they can retain their profit margin.
On the negative side, there is not the budgetary certainty offered by a standard fixed tariff and businesses consuming electricity in peak hours are particularly exposed to the risk of spikes in charging.
Blend and extend business electricity tariff
Blend and extend business electricity tariffs are fixed term tariffs which incentivise you to extend your existing contract with your current supplier by offering you a better deal when renewing.
Although this type of contract does deliver genuine savings, you’ll more likely save money by switching supplier instead.
Green business electricity tariff
Green business tariffs provide companies with the ability to source electricity from 100% renewable sources like wind power, tidal power, and solar panel. Later on in this article, we provide you with a list of the UK’s leading green business electricity tariffs (including links) so that you can find out more about pricing and contract terms offered.
Most green business electricity tariffs are offered on a variable rate agreement with easy-in, easy-out terms and no exit fees. There are fixed green business electricity tariffs but they are currently not widespread.
Half-hourly business electricity tariff
Half-hourly business tariffs are intended for large corporate consumers of electricity – companies using more than 100,000 kWh of electricity per annum are obliged to have this special type of meter (or an equivalent) installed.
As the name suggests, these meters take readings every half hour and they send the information back via a fixed or mobile line to your supplier. Half-hourly electricity bills are very accurate and, because of the detail they provide on your company’s actual electricity usage, they can be used later to negotiate down the unit rates you’re paying when you’re doing a deal with a new supplier.
To determine whether your premises currently has a half-hourly meter, check the MPAN number (more on that later in this article). All MPANs starting with 05, 06, 07, or 08 are half-hourly.
Flex business electricity tariffs
This type of tariff is best for much larger business electricity consumers because it allows them to bulk buy energy in advance at a fixed rate. If you believe that the current wholesale price for electricity is low, your company can take financial advantage by forward-buying its supply.
Flex contracts work very well when prices are low but a company will end up overpaying if it wrongly guesses where prices are heading and bulk buys at the wrong time.
What to do if your contract termination date is approaching
If you’re on a fixed term tariff, it’s particularly important that you know with certainty what your contract end date is. Your current supplier is not likely to inform you that it’s coming to an end unless yours is a microbusiness.
If you don’t renew your contract or make alternative arrangements, you’ll find yourself either on an out-of-contract tariff or on a roll-over contract, as we discussed earlier.
Your contract will have a termination window starting between 49 and 60 days before the final date of your current agreement. In that time, you have the opportunity to inspect the market to see if there are any better deals available for your business.
Once you have found the deal you want, you’ll need to specify to your new supplier or to your broker what your current contract termination date is. They’ll then be able to take over your supply from then.
Your new supplier will need 17 days to switch you over so you’ll need to have all of your new arrangements in place around three weeks before switch-over date.
Should I look for a supplier myself or get a broker to do it?
Whether you look for a new business electricity supplier yourself or you get a broker to do it is up to you. The energy market is ferociously complex so, if you decide to take charge of it yourself, finding a new supply agreement may take you far more time than expect.
If the value you can bring to your company through cheaper electricity bills is greater than the value you can bring to your business in other ways, it may well be worth doing it yourself. On the other hand, if your savings are likely to be no more than a few hundred pounds, is it really worth the time, effort, and frustration? A broker will take a cut of those savings – that’s true – but would you rather be doing something else instead?
So, what do you need to know about energy brokers?
How will my broker charge me?
While some brokers charge a consultancy fee, most brokers use a “cost plus” model. In other words, they buy business electricity at a certain rate per kWh from their suppliers and they add their margin on top.
Once they’ve signed you up, they inform the supplier of both the price per kWh and the daily standing charge you’ve agreed to. The supplier invoices you at those rates and they then pay the difference once you’ve paid the bill to the broker.
Will I see every deal on offer?
Some brokers have access to the whole of the market but most work with just a few suppliers. The business reason for this is that, in many cases, the price they’re charged by their suppliers for electricity goes down when certain sales volumes targets are hit.
When the prices they pay drop, they can either pass on the savings to their existing customers or choose to keep them. If they choose to keep them, then they’ll increase their level of profitability on their existing contracts.
Are brokers legally obliged to find my company the best business electricity rates?
Although OFGEM provides sales guidance for brokers, it does not license them.
Your broker is not required to find you the best deal. If you feel you have been missold a business electricity contract, there are now a number of legal firms offering to represent companies seeking financial redress.
Do I have to sign a contract to be committed to a particular business electricity tariff?
While some brokers may still work with written contracts, most now accept verbally binding agreements made over the phone.
Where can I see a list of business electricity suppliers’ tariffs for myself?
Unlike with the domestic electricity market where tariffs are published on suppliers’ websites, there is no legal obligation for business electricity suppliers or brokers to publish this information. Only a handful do and they generally tend to focus more on advertising their variable tariff contracts.
Because every business is different and they have their own individual electricity and gas needs, supply deals are done on a bespoke basis most of the time.
If one supplier published their full range of tariffs online, it might put them at a disadvantage to other suppliers which then decide to undercut them. Also, competition between suppliers and brokers for business customers is far more intense than the domestic market because of the profit margins involved.
Good broker, bad broker?
There are bad brokers trading right now – you should always be as vigilant as you can be when procuring for your company and your business electricity supply is no different. Be wary of those with bad online reviews, those unable to provide referees, and those which use cold calling in particular.
However, because of the high number of brokers in the market chasing the same customers, most do business properly and they are focused on saving their customers as much money as possible.
What information will I need to supply to get a quote?
When you start looking for a new business electricity supplier (either directly or via a broker), they will all ask for the following information:
- an electricity bills from the previous three months
- your current contract’s end date and the name of your supplier
- information about your business
- the dates of your switch-over window
- your MPAN number
If you’re using a broker, you’ll also have to sign a letter of authority (LOA). The LOA allows the broker to act on your behalf with your existing supplier – rather like the way your accountant can act on your behalf with HMRC when they become your registered 2tax agent”. Your existing supplier will not interact with your broker without an LOA.
The LOA will also allow your broker to act on your behalf with potential new suppliers. When you examine the letter of authority, please be absolutely certain that the LOA does not allow them to sign contracts on your behalf.
Key points when negotiating your next business electricity supply contract
The daily standing charge
The average daily standing charge is 28p. Generally, the lower the standing charge, the higher the unit charge (for electricity consumption).
There are a handful of suppliers which offer no standing charge tariffs to businesses but they’re generally designed for commercial or residential landlords who experience voids in tenancy and who do not wish to pay a standing charge when their properties are empty.
As we’ve seen, the unit charge varies greatly according to the location of your business and the amount of electricity it actually uses. OFGEM figures suggest that the average British microbusiness uses between 5,000 and 15,000 kWh of electricity per year with an average price per kWh of around 15.48p.
The unit charge
As we’ve seen, the unit charge varies greatly according to the location of your business and the amount of electricity it actually uses. OFGEM figures suggest that the average British business uses between 15,000 and 26,000 kWh of electricity per year with an average price per kWh of around 14.4p.
How to estimate your bill size by using a supplier’s quote
Estimating the likely size of your electricity bill will be difficult if you have no historic information about how you use electricity – this is particularly true for newer businesses.
If you do have historical information, you can work out how much you’ll be paying over a year by adding together:
- the cost of the daily standing charge over the year (by multiplying by 365) and
- the number of kWh you used in the previous twelve months (multiply by the unit rate).
The length of your contract
As we mentioned earlier, fixed term contracts may have terms of between 6 months and 5 years. You should expect when seeking new quotes to be pitched for a minimum year-long contract at the very least.
Be careful though because the benefits you derive from being in a fixed term contract may be less than you think.
By asking you to commit to, for example, five years’ supply, the broker or energy company is attempting to maximise revenues from doing business with you. There’s nothing wrong with that, of course, and, by making such a long commitment to a supplier, this will likely lead to lower daily standing charges and unit charges.
But does that mean it’s value for money? Do fluctuations in the wholesale market really justify signing a 5-year fixed rate supply deal?
On the first row of the table below, you can see the nominal change in average prices for gas and electricity paid by British businesses between 2014 and 2019. In each case, the change in electricity wholesale prices is the major factor in the general overall rise in energy bills.
|Microbusiness||Small business||Medium business||Large business||Industrial|
|Nominal change in prices||12.13%||11.83%||11.96%||11.63%||11.17%|
|Inflation adjusted change in prices||3.75%||4.58%||5.71%||2.81%||-1.32%|
According to the Bank of England, inflation averaged 2.5% in each of these years. If you adjust the nominal figures for inflation, microbusinesses, small businesses, and medium sized businesses would save a very small amount of money by fixing their price at a competitive rate based upon the wholesale price at the time when they signed the contract.
However, industrial users would be paying more than they need to than if they were on a competitive variable tariff which closely tracked the wholesale market rates.
There is no way of knowing how much the wholesale electricity price will fluctuate over the next 5 years. Therefore, the decision on whether or not you should sign up to a 5 year (or similarly long) contract is a commercial one for you and your decision may or may not save your company money.
Bear in mind though that you will be tied in for 5 years and you won’t be able to sign up to any new supplier deals (no matter how better one might be) in that time. If you attempt to leave, your supplier may either refuse or they may send you an invoice featuring a significant termination charge.
When your business uses electricity
If you have the right type of legacy meter, it will record the times at and days on which you actually use electricity. This functionality is built into the newer smart meters which many business owners are choosing to have installed at their premises.
Many electricity suppliers offer a variety of different off-peak tariffs – times of the day and days of the week when the electricity your business consumes is cheaper. If you have a meter capable of measuring usage in this way, make sure you ask your broker or potential supplier about off-peak tariffs as the savings can be considerable.
Negotiate on your gas at the same time if that is due for renewal
Although business energy suppliers do not offer dual fuel schemes (more on why later in this article), you will almost certainly gain additional negotiating power by letting the broker or supplier you’re dealing with that you’re also seeking a new gas contract.
Frequency and method payment
Most electricity suppliers insist that you pay them by direct debit offering either a quarterly or monthly payment option.
If you choose a monthly payment option, you are likely to receive an additional discount on your daily standing charge (and perhaps your unit rate) because more frequent payment helps your supplier’s cash flow.
If your business uses a half-hourly meter or you operate from multiple sites
If your business uses a half-hourly meter, it is subject to BSC P272 and P322 regulation. When seeking a new supplier, you will need to submit it to a full tender – brokers and suppliers will not be able to provide you with an instant quote even if you have historical usage data upon which they could normally base their estimates. If you’re using a broker, they will instead invite suppliers to send their best rates which you can later review before making a decision.
If you operate multiple sites and you have separate fixed supply agreements for each site, you may have to move each site over one at a time to a different supplier when each site’s individual current contract ends. However, if you have a fixed term agreement covering all of your sites coming to the end of term or if all of your sites are on an easy-in, easy-out variable contract, you should be able to switch supplier(s) in one go.
Deciding which company to supply you
No matter which electricity supplier you choose, the electricity delivered to your premises will be exactly the same. No supplier offers “better” or “more reliable” electricity in comparison to their competitors.
Because there is absolutely no difference in the quality or efficacy of the electricity being delivered, it’s hard to argue that the sole or major reason you choose a supplier should be for any other reason that the price you’re being offered.
In such a competitive market, there is every incentive on you to play off supplier against supplier and broker against broker.
Many businesses find that they can save up to 40% on their electricity bill by going through this process. Unless your company is a particularly heavy consumer of electricity, the effect on your fixed costs is not likely to be dramatic however, as is true in all business procurement, it’s always better to have money in your bank account rather than somebody else’s.
Business electricity FAQ
Is it true that the price of business electricity is always going up?
Does the price of business electricity keep going up? Without factoring in inflation, energy prices for business have risen by between 58.6% and 81.1% since 2006 with microbusinesses, small businesses, and industrial users suffering the brunt of the increases.
How have changed in business electricity and business gas prices affected companies of different sizes in the UK since 2006? We took the average energy use for different types of business and we extrapolated average energy bills for non-domestic customers using figures from the Department for Business, Energy & Industrial Strategy (DBEIS).
The figures we used included the Climate Change Levy. Actual business bills will be higher than the figure shown in the “Total” column on the tables below as a result of the charging of VAT.
Before you look at the tables, it’s important to share a quick caveat with you. Pricing within the energy sector is very volatile – many businesses would have been paying less (and some paying a lot more) than the rates shown here particularly if they were signed up through a broker. The figures used in the DBEIS report are derived from its own survey of direct energy suppliers (not brokers or resellers).
What does what’s on these tables mean?
- Year – the year covered by the statistics
- Electricity use per annum – expected electricity usage as measured in kWh units in a year
- Gas use per annum – expected gas usage as measured in kWh units in a year
- Electricity kWh/p – the cost of a unit of electricity in that year according to DBEIS
- Gas kWh/p – the cost of a unit of gas in that year according to DBEIS
- Electricity charge – a sum derived by multiplying “Electricity use per annum” by “Electricity kWh/p”
- Gas charge – a sum derived by multiplying “Gas use per annum” by “Gas kWh/p”
- Total – the sum of “Electricity charge” and “Gas charge”
- %age change – the %age change in the Total figure
Microbusiness energy prices up 95.57% between 2006 and 2019
Microbusinesses pay the most per unit of electricity out of all sectors we examined for this article. In the period of time covering 2006 to 2019, prices rose 95.57% before inflation is taken into account. In all but four of the years, prices rose and, in the last two surveyed years, average bills rose by £230.90.
|Year||Electricity use||Gas use||Electricity kwH||Gas kWh||Electricity charge||Gas charge||Total||%age change|
Small business energy prices up 84.83% between 2006 and 2019
Small businesses also suffered a steep rise in energy prices in the last two years – equivalent to £527.26 most of which was caused by fluctuations in the electricity unit rate. For small businesses, there were only two annual declines in price over the 12 years measured.
|Year||Electricity use||Gas use||Electricity kwH||Gas kWh||Electricity charge||Gas charge||Total||%age change|
Medium-sized energy prices up 72.82% between 2006 and 2019
For medium-sized companies, the average energy bill rose by £845.71 between 2017 and 2019, most of that increase coming from higher electricity supply costs.
|Year||Electricity use||Gas use||Electricity kwH||Gas kWh||Electricity charge||Gas charge||Total||%age change|
Large business energy prices up 71.68% between 2006 and 2019
Larger businesses had the lowest overall rise in their energy bills over the time period measured with, again, most of the rises coming from higher electricity bills.
|Year||Electricity use||Gas use||Electricity kwH||Gas kWh||Electricity charge||Gas charge||Total||%age change|
Industrial business energy prices up 88.68% between 2007 and 2019
In the 12 years measured for industrial users of business energy (OFGEM did not have figures for 2006 for this sector), prices fell in four of the years. In the last year measured, prices shot up by 8.03%.
|Year||Electricity use||Gas use||Electricity kwH||Gas kWh||Electricity charge||Gas charge||Total||%age change|
What is green electricity and who supplies it?
You may wish to consider using a green electricity generator as your new supplier. Much of the energy produced in the UK relies on fossil fuels like coal, gas, and oil – the burning of these substances releases carbon dioxide and other elements into the atmosphere which scientists claim are changing the climate of the planet.
Green electricity now is responsible for a third of the UK’s energy supply. Green electricity is generated using renewable sources like hydro, solar, biomass, wave, waste incineration, and wind power. They are called renewable sources because electricity is created from the natural flow of energy around the planet and from recycling. While the manufacture, construction, and installation of the equipment to produce green electricity does have an environmental impact, it is far less than the electricity we use generated by fossil fuels.
How is the electricity supplied to your business premises green? The suppliers will either generate the electricity themselves using renewable sources or bulk buy green electricity generated from third parties.
As awareness of the damage being caused to the environment has become an issue of urgency and importance for British citizens and businesses, the demand created for green electricity has led to a surge of investment. This has meant that the cost of generating green electricity (the wholesale price) is, in many cases, virtually identical to the cost of electricity generated using fossil fuels.
Some of the most competitive business electricity tariffs now available are from suppliers operating in this sector because of the dramatic fall in the wholesale price in recent years.
Which companies supply green business electricity?
There are currently thirteen business electricity and gas companies providing 100% renewable green electricity to British businesses.
|Supplier Name||Fixed price option||Fixed contract length||Variable price option||Supply gas?|
|Bulb green business electricity||No||No tie in||Yes (30 days’ notice if prices rise)||Yes|
|Ecotricity green business electricity||Yes||No contract/exit fee||No||Yes|
|Engie green business electricity||Yes||–||Yes||Yes|
|F&S Energy green business electricity||No||–||Yes||No|
|Good Energy green business electricity||Yes||12 or 24 months||Yes||Yes|
|Green Energy UK green business electricity||No||No fixed term, no exit fee||Yes||Yes|
|Naturgy green business electricity||Yes||Variable||Yes||Yes|
|Octopus Energy green business electricity||Yes||12 and 24 months||Yes||Yes|
|Ørsted green business electricity||Yes||Yes||Yes||No|
|Shell Energy green business electricity||Yes||12-36 months||Yes||Yes|
|Smartest Energy green business electricity||–||–||–||No|
|Total Gas and Power green business electricity||Yes||Up to 4 years||Yes||Yes|
|Vattenfall green business electricity||Yes||Variable||Yes||Yes|
Green electricity as part of your company’s environmental drive
There is another benefit to greener energy consumption that often goes missed by companies. Recent surveys have shown that millennials, whether buying for themselves personally or purchasing on behalf of a business, care about the values and business practices of the companies they give their custom to. In fact, seven out of ten millennials research companies online as part of their decision-making process.
What’s important to remember is that millennials are beginning to supplant Generation Xers, Generation Yers, and Baby Boomers as the richest and highest earning socio-economic strata in the UK and around the world. They control much more of the money than they used to and they’re in charge of more businesses than you might imagine.
In an era of growing alarm about the effect that energy generation is having on the world’s climate, you can share with existing and potential clients that you have switched to 100% renewable electricity as part of your organisation’s wider strategy on minimising its impact on the environment
Consider signing a Climate Change Levy agreement for heavy users
Another way to reduce your bills and to signal your commitment to the environment to customers is to sign a Climate Change Levy agreement. These are agreements made between you and the Environment Agency in which you commit to reducing your company’s CO2 emissions and energy usage.
With a Climate Change Agreement (CCA), you agree to meet certain targets over four consecutive two year periods. If successful, the following discounts will apply to the Climate Change Levy your company pays.
|Rate from 1 April 2020||Rate from 1 April 2021|
|Electricity supply||92% discount on CCL||92% discount on CCL|
|Gas supply||81% discount on CCL||83% discount on CCL|
|LPG supply||77% discount on CCL||77% discount on CCL|
To find out more about the Climate Change Agreement, please download this directory and get in touch with the contact for the sector closest to the line of business you operate in.
How can I reduce electricity consumption in my business?
As well as looking for the cheapest business electricity rates, you can also save money by changing the way you think about electricity and how you use it. You can then share those tips with your customers on your website and on social media channels.
Further savings of up to 20% on electricity charges can be achieved by adopting easy-to-implement green measures and by installing technology which helps you understand better how you actually use electricity.
Investing in EMS software and smart meters
For companies with larger premises, energy management systems (EMS) can reduce unnecessary or wasteful electricity usage quickly. An EMS can be set to determine the level of power needed to minimise electricity use and the environmental impact of that electricity use across a business, its building, its estate, and across a remote workforce.
Taking data from a variety of different sources including utility bills, smart meters, IT equipment management, and general energy audits, it provides constant monitoring of energy use via benchmarking with a view to identifying opportunities to reduce consumption without affecting business processes or efficient business operation.
For smaller companies, energy monitors which report and visualise actual electricity and gas usage can provide a great deal of insight into how your business uses electricity. You may also want to take the opportunity to replace any old meters with newer smart meters for real-time consumption information.
Replacing old equipment with A+ grade efficient appliances
Much of the equipment that companies use every day to keep staff and customers comfortable or in its day to day business activities are graded according to their energy efficiency.
A+ is the most energy efficient and G is the least efficient. The actual award is determined by the testers who measure the units of energy required for the equipment or appliance to perform its core function.
In addition to the cost savings made by more efficient energy use, replacing older equipment and appliance with newer A+-graded equivalents can be a part of your company’s environmental policy. Your company will also benefit from lower maintenance bills because of a less frequent need to repair these appliances.
Appliances, equipment, and other items which receive an energy efficiency grading include refrigerators, freezers, washing machines, tumble dryers, dishwashers, ovens, air conditioning units, light bulbs, televisions, cars, and tyres.
Switching off appliances when they’re not being used
Television screens and monitors cost British businesses millions every year when they’re left in standby mode. Each computer you have will cost you £20 a year for the time it’s in standby. Portable business items like smartphones, laptops, and tablets which continue to draw electricity even though they might now have a full charge cost you money. If you have a sizeable workforce operating in large premises, your company is likely to be spending £1,000s on electricity it doesn’t need to if you and your staff can break these habits.
One way to encourage staff to take part would be to place signs around your premises reminding colleagues to switch off all electrical appliances when not in use.
A broker/potential supplier has asked for my MPAN number. What’s that?
MPAN stands for Meter Point Administration Number. Each home and business premises in the UK has its own meter measuring electricity consumption which can be identified using the MPAN number.
When the electricity and gas markets were deregulated in the late 1990s, each electricity and gas meter was given its own reference number (the reference number for gas meters is called the MPRN). This was done so that, when a householder or a business owner wanted to swap suppliers, it would make the process of transition quicker and smoother.
The MPAN number is 21 digits long. It contains information on what type of meter you have, which distributor is responsible for bringing electricity to your premises, the type of readings the MPAN takes, how much electricity is lost on the journey to your premises, a check digit, and a unique identifier.
The unique identifier is eight digits long and that’s the part of the MPAN number which identifies your premises by its address.
To find your MPAN number, simply look at your bill or at the meter itself. Your broker or potential supplier may refer to the MPAN as your Electricity Supply Number, your S Number, or your Supply Number. Please note that your MPAN number is different to the account number you have with your supplier.
In larger premises, an MPAN number may actually identify a number of separate meters with the property. If in any doubt, please speak with your broker or potential supplier.
Do I have to pay VAT on my business electricity?
You do have to pay VAT on your business electricity supply at a rate of 20%. Unusually, even if your business is VAT registered, this is one of a handful of types of supply on which you cannot reclaim the VAT.
If your company consumes less than 1,000 kWh of electricity each month, then your supply should apply a 5% VAT rate instead of a 20%. The equivalent figure for your gas supply is 4,397 kWh consumption per month.
If your usage is under those amounts, you should contact the customer services team of your existing supplier – you will be entitled to a refund on the overcharged VAT. You will also be freed from the obligation of having to pay a Climate Change Levy on your bill too.
What about joint domestic and commercial premises like a flat above a shop or living quarters in a pub? As long as 60% or more of the combined electricity is used for domestic purposes, you can ask your supplier to apply a 5% VAT rate to your domestic supply and a 20% VAT rate to your commercial supply.
Why don’t business energy suppliers offer dual fuel deals?
The gas and electricity needs of every business are different whereas the gas and electricity needs of residential properties is roughly the same. Those differences make it much harder for a supplier to correctly set off-the-shelf gas and electricity tariffs in such a way that a joint supply contract would be economically viable for them.
However, this actually works in your favour because a gas and electricity quote will be prepared for you based upon known or predicted usage of each type of fuel.
Remember that, even if you choose the same supplier for both electricity and gas, that you’ll need to enter into separate legal agreements for both.
Does my business get a cooling off period when it signs a new contract?
There is no automatic legal right to a cooling off period on business electricity supply contracts once you have signed for and committed to your company to an agreement. This may include agreements that you have made verbally over the phone where your conversation with a company representative has been recorded.
Please make sure that, before you enter any legally-binding contractual agreement with an electricity supplier, that you are happy with the rates offered, the service level commitments provided, and the terms and conditions. You may wish to seek advice from a solicitor on the terms and conditions to be absolutely sure.
Are there any circumstances under which my current supplier will refuse my request to switch?
When you switch to a new energy supplier, your current supplier cannot object if the previous contract you had with them has expired or if you are on a deemed tariff.
If your existing supply does have an objection, they are legally obliged to share with you the reason and to share with you a way of overcoming that objection. The typical reasons why a supplier might object to a switch are that you owe them money or that your existing contract has not yet expired.