A complete guide to business energy

If you are paying too much for your commercial energy, now is a great time to compare and switch to a better tariff. Although, before you get started, it makes sense to get a better understanding on how business energy differs from domestic energy. In this guide, we will also look at the different types of tariffs available to you.

How does business energy differ from domestic?

Switching energy for your residential property is pretty straightforward and doesn’t require that much effort. Whereas moving to a new business energy tariff is a lot more complex. Compared to what you may be used to at home, here’s how commercial energy is markedly different:

Business rates are normally cheaper

Business energy is purchased in bulk, whereas domestic suppliers buy and sell gas and electricity on a monthly basis. A commercial supplier will purchase the amount required to fulfil the amount you will use for the length of your contract. This does have the benefit of accessing cheaper unit rates, but it makes it far more expensive and difficult should you wish to exit your contract at an earlier date.

Contracts are normally longer

Energy contracts for businesses may include fixed and variable rate tariffs, but they are normally agreed for a longer duration. Most contracts will last between three and five years. On top of this, you will not be able to compare business electricity or gas until your existing contract moves into the ‘renewal window’. This is usually around one to six months before the tariff expiry date.

No cooling off period

There is no cooling off period whatsoever. No 14 days to change your mind and cancel the contract without incurring a hefty fee. This means you will need to be decisive and ensure you are content with the terms and conditions of any new deal you agree to.

Single fuel only

Commercial deals don’t offer a dual fuel option. You will have a single fuel option whereby your gas and electricity will need to be compared separately. Fortunately, you can purchase both fuel types from the same provider. Just make sure you’re getting a good deal before doing this.

No simplified solutions

There are a whole range of tariffs to choose from when it comes to your home and most are fairly straightforward. However, commercial contracts don’t quite work in the same way. The supplier will assess the needs of your business and offer you a quote based on your usage. This does help you find something that meets your requirements but can make comparing quotes a little more challenging. Luckily, Utility Saving Expert makes it easy to compare business gas and electricity tariffs within minutes. We’ll help you find a suitable plan that matches your business needs and saves you money each year.

What types of business energy contract are available?

There are five different types of gas and electricity contracts to choose between. Each one has its own benefits and drawbacks, making it imperative that you are on the right one and not overpaying for your energy. Here are the five main business energy contracts available to customers:

Fixed term contract

On a fixed term contract, you will always pay the same amount per unit (kWh). Although your bill won’t necessarily be the same each month as it will still be calculated based on how much energy you use.

Variable-rate contract

On a variable rate contract, the unit rate can increase and decrease for the length of the contract due to market fluctuations. This contract type has slightly more risk, but you can also take advantage if the price of a unit rate decreases.

Deemed rate contract

A deemed rate contract is also known as an out-of-contract tariff. It’s a rolling tariff with expensive rates that are arranged by suppliers for customers who do not have a formally agreed contract. You will want to avoid this type of deal.

28-day contract

Businesses that haven’t made the switch since the energy market was deregulated will be put on a 28-day rolling contract. The price you pay for a unit rate can increase or decrease on this contract type.

Rollover contract

Those that have not negotiated a new deal once their current contract comes to an end will be transitioned over to a rollover tariff by their supplier. The provider will sign you up for another 12 months, often with their most expensive unit rates. You’ll want to avoid this type of deal as quickly as possible.

Think your business is on a contract that is unsuitable for your day-to-day needs? Utility Saving Expert is here to help. Our price comparison tools can help you secure a better deal today.

What happens when my current tariff comes to an end?

As soon as your current contract expires, you will automatically be shifted over to an expensive out of contract rate. At this moment, it is highly important that you run a utility comparison to find and switch to a better tariff before this takes place.

If you’re unsure about when your current contract is due to end, your existing supplier will get in touch with you during the ‘renewal window’ and offer you a new deal. We recommend comparing tariffs from a range of suppliers before making your next decision. After all, business contracts are lengthy, and you don’t want to be stuck on the wrong plan.

If you do decide to make the switch, your old supplier will ask you for a final meter reading before they send you your last bill. A date will also be set for when this final bill must be paid. Remember that if you haven’t yet agreed to a new plan, you will be moved over to an expensive rollover or deemed rate contract.

How much energy should my business be using?

All businesses have their own energy demands, this will depend on the size and type of industry you are operating in. Here is a quick breakdown of the average gas and electricity used by micro, small and medium-sized businesses (SMEs) along with the estimated costs.

Average business electricity use

Business Size Low End Usage (kWh) High End Usage (kWh)
Micro business 5,000 15,000
Small business 15,000 25,000
Medium business 25,000 50,000

Average business electricity prices per kWh

Business Size Average Annual
Usage (kWh)
Average Price
(per kWh)
Standing charge
Average Annual Price
Micro business 5,000 – 15,000 14.4p – 15.9p 23p – 29p £900 - £2,244
Small business 15,000 – 25,000 14.3p – 15.1p 23p – 28p £2,367 - £3,660
Medium business 25,000 – 50,000 14.3p – 14.7p 23p – 27p £3,774 - £7,234

Average business gas use

Business Size Low End Usage (kWh) High End Usage (kWh)
Micro business 5,000 15,000
Small business 15,000 30,000
Medium business 30,000 50,000

Average business gas prices per kWh

Business Size Average Annual
Usage (kWh)
Average Price
(per kWh)
Standing charge
Average Annual Price
Micro business 5,000 – 15,000 5p – 5.1p 19p – 25p £400 - £820
Small business 15,000 – 30,000 4.5p – 5p 19p – 25p £820 - £1,458
Medium business 30,000 – 50,000 4.3p – 4.5p 19p – 25p £1,458 - £2,239

The above should give you an estimated breakdown of how much gas and electricity is used by a micro, small or medium-sized business (SMEs).

Compare quotes and switch to a better deal

Utility Saving Expert has streamlined the process of comparing business energy deals. You no longer have to contact one supplier after the next to get a competitive price for your gas and electricity supply.

To compare quotes, you will need to have the following details at hand:

  • Name of your current gas and electricity supplier(s)
  • Name of your tariffs, and their renewal dates
  • Your energy supply type
  • How much gas and electricity your business uses

Once you enter this information, we will be able to display a range of quotes from different suppliers. You will then be able to select the best tariff for your business. The actual switching process normally takes around six weeks to complete. Your new provider will get in touch with your old provider to arrange the switchover date.

You should not experience any disruption to service whatsoever, even on the switching date. No digging or drilling is necessary as the gas and electricity supplied will be transported through your existing cables and pipes.

Once the switch has been completed, you will be asked to submit a meter reading allowing your old supplier to send you your final bill.

We hope that this guide has given you a more comprehensive understanding on energy for business.