Business Energy

A complete guide to business energy

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Are you paying too much for your business energy? If so, it’s time to switch to a better deal. The only way you can be sure you’re getting the best available contract is to compare what’s on offer from a range of business energy suppliers.

But before you start comparing quotes, it makes sense to find out a little bit more about how business energy differs from domestic energy, and take a closer look at the types of contract on offer.

How does business energy differ from domestic?

If you've switched household energy recently, you'll probably be fairly confident about doing the same with your current commercial energy deal, but you'll quickly find that business swicthing isn't quite as straightforward - here are the main ways commercial energy differs from what you might be used to at home:

  • Business rates are often cheaper – Whereas domestic energy suppliers buy and sell gas and electricity on a monthly basis, business energy is bought in bulk. Commercial suppliers buy enough energy to last the duration of your contract, and although this means you might benefit from a cheaper unit rate, it also makes it more difficult, or more expensive, to end your tariff early.

  • Business energy contracts are usually longer – Although fixed and variable rate tariffs are available, all commercial energy contracts are taken out for an agreed term, which can be anything up to five years. And you won’t be able to shop around for a new deal until your current one enters a ‘renewal window’, which is usually between one and six months before its scheduled end date.

  • There’s no cooling-off period – Domestic energy switches take no more than 17 days to complete, 14 of which are taken up by the cooling-off period, during which time you can cancel the contract without penalty. Commercial energy deals offer no such get-out clause though, so make sure you’re completely happy before signing any contracts.

  • Business energy deals are single-fuel only – You may find taking out a dual fuel deal – where the same supplier provides both your gas and electricity – saves you money on your domestic energy bills, but there is no such option with business energy, meaning you have to run separate quote for both gas and electricity.

  • There are no off-the-shelf solutions – When switching domestic energy supplier, you can choose from a range of tariffs to find cheapest one on offer, but commercial energy contracts don’t work in the same way. Instead, suppliers assess the needs of each business on a case-by-case basis and offer a tailored quote accordingly. Although this means you can be sure the deal you get is the right fit for your business, it can also make comparing quotes a hassle, as you have to get in touch with each supplier separately. But comparing quotes through a broker means you only have to make one phone call and ensures you’re getting the best deal available.

What types of business energy contract are on offer?

Gas and electricity providers offer different types of contract, and it’s important to make sure you’re on the right one, to avoid overpaying for your energy.

There are five main business energy contracts available:

  • Fixed term – Charges a set price per unit (kWh) for the duration of the contract. This does not fix the total amount that you pay each month, which will vary according to your usage.

  • Variable-rate - Unit rates are linked to market activity, meaning they may fluctuate throughout the duration of your contract.

  • Deemed rate - If you let your current tariff end without switching supplier or arranging a new deal, you'll be placed on one of these rolling, out-of-contract tariffs, and pay your supplier's most expensive rates.

  • 28-day - A contract for businesses who haven't switched since the energy market was deregulated.

  • Rollover – A contract that is used when no alternative has been agreed before your current contract’s end date. Rates are usually among the supplier’s most expensive.

If you’re currently on a deal that doesn’t suit your business, or you think you’re paying too much for your gas and electricity, give the experts at Bionic a call now on 0800 088 6986, or request a call back.

What happens when your business energy contract ends?

Once your commercial energy contract ends, you’ll automatically be rolled onto an expensive out-of-contract rate, so it’s vital you run a business utility comparison and switch to a better deal before this happens.

Don’t worry if you’ve no idea when your current deal is due to expire, as soon as it enters its renewal window, your supplier will contact you with an their offer of a new deal, but don’t accept any offer until you’ve compared what other deals are available.

If you decide to switch provider, your old supplier will send a final bill and ask for a final meter reading to ensure this bill is accurate. You will also be given a date by which this final bill has to be paid. If you have not arranged a new deal, you will be moved onto a rollover over contract, or deemed rates, depending on your circumstances and supplier.

How much energy should your business be using?

Each business has different energy demands, but to give you a rough idea of how much gas and electricity a business the size of yours should be using, here is a breakdown of the average electricity and gas consumption rates for micro, small and medium-sized businesses.

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

Latest business electricity prices per kWh

Business size Average annual usage (kWh) Average price (per kWh) Standing charge (daily) Average annual price
Micro business 5,000 - 15,000 25.6p 69.4p £2,813
Small business 15,000 - 25,000 24.9p 79.1p £5,891
Medium business 25,000 - 50,000 26.0p 103.1p £12,726

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

And to help you work out whether you’re getting a good deal, here are the average business energy prices per kWh for micro, small and medium-sized businesses.

Latest business gas prices per kWh

Business size Average annual usage (kWh) Average price (per kWh) Standing charge (daily) Average annual price
Micro business 5,000 - 15,000 8.2p 108.5p £1,216
Small business 15,000 - 30,000 8.1p 37.8p £1,960
Medium business 30,000 - 65,000 8.0p 66.8p £4,043

Note: Prices correct as of February 2024. Rates and bill size may vary according to your meter type and business location. The prices you’re quoted may be different from the averages shown. The figures shown are the average unit rates and standing charges quoted by Bionic per business size from February 1 to February 7, 2024. Rates do not include any Energy Bills Discount Scheme discount.

How to compare quotes and switch to a better deal

MoneySuperMarket has partnered with Bionic to take the hassle out of comparing commercial energy contracts – instead of you ringing around each and every supplier to find a great deal on gas and electricity, one quick phone call to their energy experts is all takes for us to compare quotes from a panel of suppleirs to find a deal that’s right for your business.

Bionic uses smart data to find out about your business and its energy use, and cut the time it takes to find a deal that’s right for you. It might also help if you can tell us the following:

  • The name of your current gas and electricity suppliers
  • The name of your tariffs, and their end dates
  • Your supply type
  • How much gas and electricity your business uses

Bionic will offer you a number of quotes, from a range of suppliers, you just then need to decide which deal is the best fit for your business, and they'll set up your new contracts with your new suppliers.

The switch should take around six weeks – your new supplier will work this out with your current supplier, then let you know the switching date - and there should be no disruption to your electricity supply, not even on the day of the changeover. Gas and electricity will be supplied through the existing pipes and cables, so there’s no need for any digging or drilling at your workplace.

When the switch is complete, you’ll need to take a final meter reading on your old supplier can issue your final bill, settle up any money you might owe on the old contract, and enjoy the savings you’re making with your new one.

If you want to make even more savings on your energy bills, consider ways in which your business can be more energy efficient, and maybe ask your new supplier about an energy audit - a short phone call or site visit is all it takes to quickly identify areas where your business can cut consumption and save money.

Give the business energy experts a call now on 0800 088 6986, and see how much you could save.

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