Your business energy costs are made up of unit rates - the amount you pay for each unit of energy - and standing charges - a fee that goes towards the cost of physically supplying gas and electricity to your premises.
Comparing business energy tariffs can be complicated because you have to look at separate quotes for gas and electricity. This makes it harder to work out which deal is the best value for your business. Looking at the price per kWh can help make it easier to compare like for like, so you can be sure you choose the right tariff for you.
These average prices per kWh should give you an idea of what you can expect to pay, based on the size of your business.
|Business size||Annual gas usage (kWh)||Unit price per kWh|
|Mirobusiness||5,000 - 15,000||4.0p|
|Small business||15,000 - 30,000||3.8p|
|Medium business||30,000 - 65,000||3.5p|
|Business size||Annual electricity usage (kWh)||Unit price per kWh|
|Mirobusiness||5,000 - 15,000||12.5p|
|Small business||15,000 - 30,000||11.0p|
|Medium business||30,000 - 50,000||10.5p|
The amount you pay per unit (kWh) can vary between business energy suppliers. When putting together your business energy quote, suppliers assess the circumstances of your business, including things like energy consumption and business location. They then use this information to work out the cost of your quote and the cost per unit (kWh) you’ll have to pay for the energy that your business uses.
When working out a quote for your business energy costs, a supplier will look at:
The type of business you own. This dictates the patterns of energy consumption during the week, because not all businesses work Monday to Friday 9.00am to 5.00pm. Businesses that use a lot of energy during the evenings and weekends will be charged different rates compared to the daytime - these rates are usually lower, because there’s less demand on the network.
How much overall energy you use in a year. Normally, using more energy gives you a lower price. But, if unit rates go down, sometimes the daily standing charge will go up. It’s always best to check your overall offer in terms of the cost for a full year, rather than just looking at unit prices.
The size of your business. Your buying power depends on whether you run a small business or large corporation. There are some ‘group buying’ organisations that work on behalf of SME companies, but they’re rare. A micro business usually just has to choose from the standard tariffs that are on offer.
The type of contract you have. If you have both electricity and gas under a dual fuel contract, you may find that both have slightly lower rates. This isn’t the case for every energy company, so it’s worth comparing both single fuel and dual fuel contracts.
Your current energy provider. You could already be with the most or least expensive supplier on the market, but you won’t know until you compare tariffs.
Where your business is located. The region your business is located in affects the quotes you’ll get, because prices vary around the country. For example, Scotland has some of the highest prices in the UK, whereas the Midlands has some of the lowest.
The length of your contract. This has an impact on both unit rates and daily charges. In general, for every year you extend your contract, an extra 6% will be added to your unit rates, and 2%-6% will be taken off the standing charge.
Other than these factors, your cost per unit (kWh) can also be affected by things outside your control and the control of your supplier. For instance, the wholesale cost of gas and electricity (the price your supplier pays for the energy it supplies to your business) can be impacted by anything from natural disasters to political events and conflicts.
Getting a fixed term contract is the best way to save on your commercial energy contract, but it’s not the only thing that will affect your bill.
As well as fluctuations in the wholesale price of gas and electricity, these things will also have an impact on your rates:
Maintenance & care plans. Some suppliers will offer to include maintenance and care of your commercial gas system as part of their contract. Make sure you check how much this will cost you, and weigh up whether it provides the best value for money.
Rollover contracts. At the end of your fixed term contract you might end up getting rolled over into a more expensive deemed rate contract. It’s important to know when your contract is up for renewal, so you can shop around to get the best tariff.
Bundled plans. Some UK energy companies will offer you lower business gas prices if you also have a commercial electricity contract with them. So if you’re in the market for both gas and electricity it can make sense to bundle them together and buy from one supplier.
The priority is to get the cheapest deal possible for your business. But, while it’s easy to assume the cheapest tariff will be the best deal for your business, it’s also important to choose the right supplier. If they’re not a good fit with your business, you could run into problems later on that could end up costing you more in the long run.
Our team of experts here at MoneySuperMarket can find you the best prices from the energy suppliers that are best suited to what your business needs. Give us a call on 0800 088 6986 to get started.
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