Business Tariffs Explained

Business energy tariffs are tailored to meet your company’s day to day needs rather than being placed on any standard tariff.

Having this much accuracy is beneficial for any company manager, but it can still prove challenging to ascertain how much your gas and electricity tariff is costing you each year.

What business electricity and gas tariffs are available?

Businesses of various types and sizes will have their own unique requirements. As a result, energy providers offer a variety of different tariffs to meet these distinct needs. Generally speaking, there are five main types of tariff contracts available to choose between when you compare and switch business energy. These include the following:

Fixed term tariff – You will always pay the same amount per unit (kWh) on a fixed term contract. Although your bill won’t necessarily be the same each month as it will still be calculated based on the amount of energy you consume.

Variable-rate tariff – On a variable rate contract the unit rate can increase and decrease for the duration of your contract through market fluctuations. The unit rate is the amount you pay per kWh of gas and electricity you consume. This contract type has slightly more risk, but you can also benefit if the price of a unit rate drops.

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

28-day contract – Businesses that haven’t made the switch since the energy market was deregulated will be placed 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 when their existing contract comes to an end will be moved over to a rollover tariff by their supplier. The provider will sign you up for another year, often with their most expensive unit rates. You’ll want to avoid this type of business tariff as soon as possible.

Fixed term tariffs can help your company save money when you compare business electricity and gas, no matter what size or type of industry you operate in. This is typically one of the quickest ways to reduce your expenditure.

How does your business’ credit rating affect your energy rates?

The credit score and history of your company will also play a part in which business energy suppliers choose to provide you with gas and electricity. Suppliers will be conscious about the associated risks when taking on a new customer as business energy is expensive and will be purchased in large quantities. The last thing a provider wants to do is take on a commercial customer that is not able to keep up with their tariff payments.

If you operate in a high-risk industry or your company has a lower credit rating, your choice of supplier and business tariff may be limited. It is clear why some energy companies will not accept a business that has a poor credit history or a poor credit score, as they will not want to take on this added level of risk, it’s far easier for them to restrict their options. Some suppliers, as a result of the above, may not grant a business access to their lowest rates either.

Suppliers that do accept a business with a lower credit rating may do the following to offset the risk involved:

  • Charge a higher premium
  • Ask for a security deposit in advance
  • Insist that your business pays via direct debit
  • Install a prepayment meter on your premises

Find out more about prepayment and smart meters for business in our guide on the subject.

With this in mind, it shouldn’t come as a surprise that energy suppliers offer their best tariffs to those commercial customers that have an excellent credit history and rating. The supplier will conduct a credit check when you apply for a business energy tariff to find out your credit score. Analysts in the industry estimate that 33% of businesses are not able to access the cheapest rates because they do not meet the minimum credit score threshold. Established companies that have their finances in order will be able to access the best business tariffs on the market.

Start-up businesses generally have a lower score as they have not been around long enough to build a good credit history. If you’re company is relatively new or you haven’t been able to keep on top of your finances, an energy supplier may be reluctant to offer you the cheapest business energy tariff. If you’re a new start up, it can also pay off to better understand your business energy bills.

What happens when your business energy tariff comes to an end?

When your existing contract comes to an end, a supplier will normally place you on their most expensive standard tariff. This can be costly and is not an ideal situation to find yourself in. Fortunately, there is light at the end of the tunnel. You don’t have to stay on this type of tariff for long.

As your existing business tariff is nearing its end, set a reminder for yourself to cancel it during the renewal window. You will then need to renegotiate a new deal by comparing deals. This can be done through Utility Saving Expert’s free online comparison tools and is the smartest way to get a better deal for your business.

If you’re in the process of moving to a new office, you will require a change of tenancy.

We are here to help you find the right business tariff for your needs. It’s quick and easy to compare prices online and the whole process shouldn’t take you more than ten minutes.

Before you begin, you will need the following details to hand:

  • A copy of your most recent energy bill
  • Business registration information including address
  • Your MPAN and MPRN numbers from your bill or meter
  • The date your current tariff is due to end
  • The date your switching window opens

If you don’t have a copy of your most recent energy bill, don’t worry as we can still provide you with an estimate on how much you’re likely to save on a new business tariff. Simply enter how much you currently spend on gas and electricity.

Being on the right business energy tariff could be the difference between being profitable or making a huge loss for some companies. So, it is important that you find a deal that is right for your company.