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How to compare business energy prices
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A guide to business business energy tariffs!
A fixed-rate business energy tariff locks in your price per kilowatt hour (kWh) for the duration of your contract. However, this does not lock in the total cost of your bill, as this will still depend on how much gas and electricity you use.
While you won’t know your exact bill each month, a fixed-rate tariff can make it easier to track the cost of your usage and how energy-efficient your business is.
A variable tariff means that the price per unit of energy you pay will change with the wider energy market. This means that sometimes you could be paying less than a fixed-rate tariff, but other times you could be paying more.
The risk of a variable tariff is that if energy prices rise sharply, you could end up paying a lot more for your business energy.
If your business energy contract ends and you haven’t agreed to a new one, your supplier may automatically roll you over to a new contract. This is called a rollover contract.
Rollover contracts, like deemed and out-of-contract rates, are typically more expensive than the average business energy contract. However, rollover contracts are more difficult to get out of. You may be tied to this contract for 12 months or more.
This is why it is important to keep track of your renewal periods and to start looking for a new energy supplier before your contract ends.
If you have nine or fewer employees, your rollover contract cannot last longer than 12 months.
If you are a large business and have the time and resources to manage your energy consumption, you may be offered a flexible rate. This means that you have control over when you buy your energy and how much you buy. This gives you the opportunity to take advantage of lower energy prices, but it also means that you are exposed to the risk of higher energy prices.
A deemed rate is a temporary rate that is applied to businesses that do not have a contract with an energy supplier. Deemed rates are often the most expensive business energy tariffs.
However, you are free to switch suppliers or agree to a new contract with the existing supplier at any time.
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Compare Business Gas & Electricity Rates
The statement is saying that there is no one-size-fits-all answer to the question of how much a business will spend on gas and electricity each year. However, the table provides a rough estimate of what other businesses of a similar size spend on gas and electricity each year.
Average electricity kWh Prices by business size
|
Business size
|
Annual usage
|
Unit price (per kWh)
|
Daily standing charge (pence)
|
Annual cost
|
|---|---|---|---|---|
|
Micro business
|
1,000 to 5,000 kWH
|
11.2p
|
30.0p
|
£1,508 (based on annual usage of 8,000 kWh)
|
|
Small business
|
5,000 to 10,000 kWh
|
15.3p
|
60.0p
|
£3,000 (based on annual usage of 12,000 kWh)
|
|
Medium business
|
10,000 to 30,000 kWh
|
21.1p
|
90.0p
|
£6,000 (based on annual usage of 17,000 kWh)
|
|
Large business
|
More than 50,000 kWh
|
28.0p
|
140p
|
£10,500 (based on annual usage of 25,000 kWh)
|
Disclaimer: Due to volatility within the energy market, prices can change on an hourly basis meaning that the prices you’re quoted are different from the averages shown. Prices may also vary according to your meter type and business location. Updated June 2023.
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Discount Scheme for Businesses' Energy Bills
The Energy Bill Discount Scheme (EBDS) is a government scheme that provides a discount on energy bills for eligible businesses in the UK. The scheme was launched in April 2023 and is due to run for 12 months.
Click here to find out more about the Energy Bill Discount Scheme.
|
Business size
|
Wholesale Price Threshold
|
Maximum Discount
|
|---|---|---|
|
Non electricity-intensive industries
|
20.5p/kWh
|
1.961p/kWh
|
|
Electricity Intensive Industries
|
12.5p/kWh
|
8.9p/kWh
|
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Frequently Asked Questions
Business energy is the energy that is used by businesses. It includes electricity, gas, and water.
There are many benefits to reducing your business energy consumption, including:
- Saving money: Reducing your energy consumption will lead to lower energy bills.
- Reducing your carbon footprint: Energy consumption is a major contributor to greenhouse gas emissions, so reducing your energy consumption will help to reduce your impact on the environment.
- Improving your reputation: Many businesses are now committed to reducing their environmental impact, so reducing your energy consumption can help to improve your reputation as a sustainable business.
There are a number of ways to reduce your business energy consumption, including:
- Making changes to your behavior: This could include things like turning off lights and appliances when they are not in use, and unplugging electronics when they are not being used.
- Making changes to your building: This could include things like improving the insulation of your building and installing energy-efficient appliances and equipment.
- Switching to renewable energy sources: Renewable energy sources, such as solar and wind power, are clean and sustainable, and they can help you to reduce your reliance on fossil fuels.
All businesses that use electricity meter profile classes 05 to 08 will be upgraded to a half-hourly meter. This will change the way you are billed for electricity usage and will result in some additional charges.
Ofgem has made it easier and faster for businesses to switch energy suppliers. This is good news for businesses, as it gives them more choice and the potential to save money on their energy bills.
Ofgem has made it easier and faster for businesses to switch energy suppliers with the Faster Switching program. LGP has updated its internal processes to support this new program. If you are a business owner looking to compare business gas and electricity suppliers, contact London Gas and Energy energy experts today.
The Microbusiness Strategic Review was launched in 2022 with the goal of improving energy agreements for small businesses in the UK. Based on consumer feedback and research, Ofgem has introduced new rules for TPIs/Brokers and energy suppliers to help small businesses when buying energy.
Several parts of the overall plan are now in effect, which will contribute to the overall goal of providing small businesses with a better experience in the energy industry.
A letter of authority (LOA) is a document that gives a third party the power to act on your or your company’s behalf in dealing with energy suppliers. A well-written LOA should list the specific tasks and responsibilities that the third party is authorized to handle for the principal, and it should always be signed and dated. It should also state the specific period of time for which the authority is granted.