Finding the energy company offering the best business gas prices is difficult. There is healthy competition among suppliers and these suppliers offer a wide variety of tariffs for business owners to choose from. Understanding exactly which one is likely to offer you the cheapest price is difficult.
If you want to find out the latest offers on the market for competitive business gas prices, fill in the form at the top of the page. We’ll come back to you with 3-4 quotes based upon your company and its gas supply needs. Our service is free and there’s no obligation to agree to any offer we find for you.
Make sure you do your due diligence if you do use a broker after recent publicity about a few rogue firms’ tactics.
How is business gas charged?
On most business gas bills, there are two charges – the standing charge and the unit cost (sometimes called the energy cost).
The standing charge is a fixed sum of money you pay on a daily basis for the provision of a working gas supply to your premises. In most cases, it actually covers the costs paid by your energy supplier to their suppliers (for example, transportation costs) and to the government (for example, the climate change levy).
The unit cost covers the actual price per kiloWatt hour of gas consumed.
Below is a business gas comparison using selected suppliers’ standing charges and unit/energy costs. Prices were correct as of January 2020:
|Business gas rates||Standing charge||Unit/energy cost|
|British Gas business gas supply||139.55p per day||5.76p per kWh|
|E.ON business gas supply||117p per day||7.14p per kWh|
|EDF Energy business gas supply||100p per day||5.3p per kWh|
|Npower business gas supply||123.3p per day||6.362p per kWh|
|Scottish Power business gas supply||30p per day||6.5p per kWh|
|SSE business gas supply||80p per day||5.95p per kWh|
|Opus Energy business gas supply||150p per day||6.99p per kWh|
As you can see from the above chart, you should not assume that a lower standing charge or the lack of standing charge will result in a lower overall gas bill. When carrying out a business price comparison, both charges should be considered in context with your actual or expected gas consumption.
How much should I be paying for business gas?
The following figures are estimates based upon the averages for businesses with a certain number of employees.
|Business size||Average annual kWh use||Expected annual price|
|Less than 10 staff||4,000 – 16,000||£390 – £840|
|10 staff – 25 staff||16,000 – 32,000||£840 – £1,525|
|25 staff or more||32,000 – 64,000||£1,525 – £3,050|
The only way to find out exactly what you’ll be paying is to get quotes from an energy supplier yourself or through the broker you choose to work with.
What tariffs are available?
There are five main tariffs used which govern the amount that you’re charged for your business’s gas usage.
A fixed tariff is used on a supply agreement you come to with an energy company or a broker which means that, throughout the duration of your contract, the amount you pay per unit of gas consumption will remain the same. On many fixed tariffs, the standing charge will also remain the same but it’s always worth asking the question so that you’re sure yourself of your likely overall annual gas expenditure.
In many cases, the bill you pay (either quarterly or monthly) will vary reflecting your company’s actual gas usage during the billing period.
Some gas firms offer more nuanced versions of fixed tariff contracts with which you can fix the costs of certain aspect of supply but not others. Generally, these contracts are only of benefit to larger companies.
Most fixed contracts last for a minimum of a year although some gas suppliers and brokers may offer contracts of up to 5 years. There is an argument that, if you are considering switching business gas suppliers, you should do so now.
With a variable tariff, the amount you pay per unit of gas varies according to the wholesale price of gas, forward purchases of gas by your supplier at a particular price, or a combination of both.
If some or all of the contributing factors to what determines the unit price rise during your contract, the price you pay will likely rise. And the same is true in reverse.
Most variable tariffs are rolling contracts with 30 days’ notice and no exit fee.
Out of contract tariffs
At the end of any contract you have with a business gas supplier, out-of-contract tariffs will apply if you do not renew or cancel that contract. Out-of-contract rates are normally significantly higher than the charging structure you agreed to at the start of your now lapsed contract.
You will continue to be charged out of contract rates until you either make a new agreement with your current supplier or you switch to a different supplier.
On other occasions, if you do not cancel or renew your existing contract, a roll-over tariff with the same supplier will replace it. As with the out-of-contract rates, rollover tariff rates are often considerably more expensive and you will be subject to a new 12 month contract at that rate.
Deemed tariffs are those tariffs which apply when you move into new business premises. When the old tenant left, the contract with their gas supplier would have been terminated. When you move in, that supplier is still the supplier to those premises and they charge every unit of gas used at the deemed tariff.
The deemed tariff will continue to apply until you enter a new agreement with that supplier or a different supplier.
How long should I stay in contract for?
For most businesspeople, a general rule of business is that, if you have to commit to a supplier, try to make that commitment as time-limited as possible.
It makes common sense. Someone else might come along while you’re in a contract who can do a much better deal for you. It may be that technology moves on and your competitors gain an advantage over you because you’re not using the latest machinery and equipment.
And, of course, most contracts do allow some form of exit before the originally agreed end date but you often have to pay a hefty cancellation penalty for doing so.
You may be approached by an energy company or a broker with an offer to lock your price in for five years. And it is true that, measured over a decade or so, the price of gas has slowly moved up over that time roughly above the level of inflation (meaning it’s got more expensive in real terms).
There is a decent argument to be made by locking in your prices for a long time. When measured against a variable rate tariff, you might very well save money.
But, with the market as competitive as it is, another company might be able to offer you another fixed tariff at a lower rate while you’re still in contract. And the financial sense of switching to another supplier offering a lower fixed tariff gets harder to justify if you’ve signed up for so long that the cancellation charges may be significant enough to wipe out any savings.
Most fixed term contracts are offered at a minimum period of 12 months or more. Try to negotiate with any energy supplier or broker you’re dealing with to obtain the maximum possible discount over the shortest contract length.
How to switch business gas supplier
You can switch business gas supplier without being charged an exit/early termination fee (subject to contract) within the renewal window of your existing contract. The renewal window usually opens between 49 and 60 days before the end date of the contract.
You should use this time to determine whether the contract you’re on is right for you. If you find one which is better and you want to switch to it, you should instruct your new supplier that you wish to switch over on the termination date of your current contract.
Your current supplier is obliged to release you to your new supplier but they can refuse if you owe them money. Please make sure that you are up-to-date at all times with your current supplier at all points during the renewal window.
What if I am supplied by an independent gas transporter?
The vast majority of the pipes which connect homes and businesses to the gas distribution network belong to National Grid.
For a brief period of time, the market to own the pipes which supply gas was opened to competition. Over time, most of these networks have been purchased by the National Grid – there are now only 9 companies which own these pipes which are independent of National Grid.
If the gas supply number shown on your bill begins with 74, 75, 76, or 77, then your gas is transported through one of these companies to your premises.
If you are supplied by an independent gas transporter, this does not affect your ability to switch nor will it disadvantage you on the price you pay to your chosen energy company.
Is there any disruption when I switch?
There will be no disruption to your supply nor a need to install additional equipment when you switch. If you ask to change the type of meter measuring your gas consumption, there may be a small disruption to your company’s workflow when it is being installed.
Do I pay VAT on business gas prices?
Yes. VAT is payable on business gas prices at either 5% or 20%. Explain your business and how it works in as much detail to the energy supplier or broker you’re dealing with and they will help you assess and apply to be on the right rate of VAT.
Why is there such variance between what companies charge for business gas?
The variance between the prices that suppliers charge for business gas depends on a number of different factors including:
- if they have bought a lot of energy inventory in advance, the price they paid per unit of gas
- if they buy from the market at regular and short intervals, the wholesale gas price
- the level of staff employed by the company to deliver the service and customer support
- how much profit they wish to make
Is there a green version of business gas?
There is a green version of business gas. Greener business gas tariffs are a mixture of:
- natural gas created by biodegradable products and
- carbon offset programs for the proportion of their traditionally-sourced gas.
Please make sure that you thoroughly check each potential supplier’s green credentials before agreeing to go ahead.
Are there business dual fuel deals?
Unlike domestic energy suppliers, business energy suppliers do not offer “dual fuel” deals. The definition of a “dual fuel” deal is a contract covering the supply of gas and electricity from the same supplier to a home.
Whereas most homes have a generally predictable proportionate use of gas and electricity making the pricing of dual fuel deals possible, the proportionate use of gas and electricity in a business does not follow a standard pattern. Two companies with the same turnover in different lines of business may use gas and electricity very different so there is no mathematically reliable and accurate way to price gas and electricity together.
If you take gas and electricity from the same supplier, you will have to sign separate contracts of supply for each. However, the fact that you wish to take both may give you or your broker leverage to bring the proposed rates of supply for both forms of energy down.
How to compare gas prices?
A true business gas comparison, even for companies within the same business sector, is very difficult. It depends on what you do, the number of staff you have, the age and efficiency of the equipment used in your business, the age and size of the central heating, the square footage of your premises, and much more.
The best approach is to either ask as many different suppliers as possible for the best price based upon your historical bills or to approach a broker to do the work for you.
If you want one of our team to find 3-4 competitive quotes from registered and established business gas suppliers, please fill in the form at the top of the page. Our service is free and there’s no obligation to take up any offer we find for you.