Business electricity comparison

Electricity is a key utility for every business. Learn what to look for and how to switch business electricity suppliers here

All businesses need electricity to function – that’s a fact. However, finding the best deals and tariffs to suit your company’s needs can be difficult. In this article, we’ll provide more information about business electricity, including how to navigate the switching process and what to look for in a contract.

We’ll focus specifically on business electricity – if you’re looking for information about gas for businesses, then head over to our business energy comparison page.

In this article, we’ll cover:

You can read the full article for a complete overview of business electricity comparison, or skip to the sections that appeal to you most. Or, if you’re ready to compare quotes now, just go to the top of the page and fill in the form.


Business electricity prices

When comparing business electricity prices, it’s important to know that the charges are influenced by several factors, including:

  • Size of premises
  • Number of people in the building
  • Level of electricity consumption
  • Location(s) of the business

Generally, your bill will consist of two charges. These are:

  • Unit cost – the amount paid per unit of electricity used by your business. This is measured in kWh (kilowatt hour)
  • Standing charge – a fee each day for national grid maintenance and to cover the price of getting the electricity to your business location directly

It’s important to note that business electricity prices are based upon the wholesale cost, which can be different day-to-day.

The unit price may be less expensive than domestic rates, however the VAT rate can be higher. For example, domestic users pay VAT at 5%, whereas businesses are charged 20%.

Business electricity tariffs

A tariff determines how your bill will be calculated. Two types of tariff include:

  • Fixed rate – the price you pay will be set for the duration of your contract
  • Flexible – the charges will change with the market

Other factors that can determine what prices and tariffs are available to your business are your company’s credit score and if any installation charges are necessary, such as fitting a new meter.

Business electricity meters

There are a few different types of business electricity meter. Here are some potential options:

  • Half-hourly meters – these are used for large businesses that consume high levels of electricity, as they provide a reading every 30 minutes to tailor prices accordingly
  • Multi-site meters – if your business operates across more than one location, then these types of meters unite the locations so that they all operate on the same electricity tariff
  • Smart meters – while not a cost-saving device, smart meters help to make sure your bills are accurate. Plus, they save time, as you don’t have to take meter readings

This information should give you an idea of how business electricity tariffs are created. However, as the tariffs are designed for each business’ specific needs (unlike domestic tariffs), it can be difficult to suggest a typical figure, as no two businesses are exactly the same.

In turn, as the tariffs are customised for each company, you’ll need to do the legwork to get your company the best possible deal. The first step may be researching suppliers online, and then calling the providers to find out what tariffs they can offer your start-up specifically.

Be sure to check what the unit price and standing charge breakdowns are so you know exactly what your business will be expected to pay.

How to find the best business electricity prices

Although there’s no one-size-fits-all approach when it comes to determining how much your start-up can expect to pay for electricity, here are some cost-cutting tips:

  • Pay by direct debit – many providers offer discounts when paying in this way. Additionally, this payment method is a good way to budget, especially in the early days when cashflow may be limited
  • Consider what payment methods you need – while direct debit may be popular, your business may need alternative ways to pay, such as cash or cheque
  • Look for plans specifically made for new businesses – these are designed with the needs of start-ups in mind, and so may feature lower daily charges and shorter contract lengths, as well as no or low fees for early exits
  • Think about your business’ electricity consumption – work out when your company uses the most and least amount of electricity and find the suppliers and tariffs that match the needs of your business
  • Assess all options – while it may be tempting to just accept the renewal offer, it’s wise to find out all of the options available to your business before making a decision
  • Compare business energy quotes – fill in the form at the top of the page

Home businesses

If you run a business from home, you’ll generally have to use a domestic provider. This is because you won’t be eligible for business electricity unless a considerable amount of your household’s energy consumption is from your business activity.

What is the Climate Change Levy (CCL)?

The CCL is applied to the main rates and can be found in this section on your electricity bill. It’s an environmental tax only for businesses that operate in certain sectors, and there are some exemptions. You can find out more about it here.


Business electricity suppliers

You may wonder why should you look into switching suppliers in the first place. While every business will have its own unique requirements for a provider, some reasons to switch include:

  • Cost – if you can find the same supply at a more competitive cost then this is likely to be a huge driver for many business to switch
  • Type of tariff – if another supplier is offering a tariff that wasn’t previously available to your business this could be a deciding factor
  • Customer support – the ways in which you can contact the supplier and access your account can help make the decision for you. For example, does the supplier offer multiple forms of support, such as via email or an app, or only over the phone?
  • Eco-friendly – you may want to look for a ‘green’ electricity provider, whether that’s to match your business values or to simply help look after the planet

In the UK, there are six companies that dominate the energy market. Collectively, these are referred to as ‘The Big Six’. It includes:

  • British Gas
  • EDF
  • nPower
  • E.ON
  • Scottish Power
  • SSE

You may consider one of ‘The Big Six’ suppliers as they’re experienced energy providers. You may also think about working with one of the new, independent suppliers that are out there, as many focus on small businesses.


Business electricity contracts

According to the Micro and small business customer engagement in the energy market, 2016 research report by Quadrangle, a customer consultancy company, 72% of businesses read their contract.

Your business electricity contract will contain all the key information you need to know
about your tariff and supplier, as well as the contract length.

It’s useful to know that even if you change providers and enter into a new contract with a different supplier, the same equipment and power lines can be used, so there’s no need to worry about disruptions. When you switch, it’s the new provider that organises the changeover – the process usually lasts a few weeks.

When the time comes to switch, you’ll need your electricity bill. It contains the information required to set up with another provider and enter into a new contract. This includes information such as your current supplier’s details, as well as the type of electricity your business receives and how much it uses.

It’s important to note that business electricity contracts don’t have a 14 day cooling off period, unlike their domestic counterparts.

How to choose a business electricity contract

There are a number of factors you’ll need to take into consideration to ensure you get the best deal for your company, including:

  • Length – this is generally between one and three years, although other durations may be possible. Think about how long you plan to be in your current premises, or if you’re planning to move offices, and if so, when
  • Cost – this is likely to be a high priority for any business, and especially so if you’re just starting out. Assess your company’s cashflow and finances to see whether you’ll be able to pay the charges for the amount of time you’ll be locked into the contract
  • Benefits – while this may not be the priority, it’s useful to review what extras or incentives each supplier offers, such as vouchers or discounts for certain payment methods
  • Services – if you’re switching providers and you require a new meter or other work, consider what is and isn’t included in the contract. Additionally, check if the contract offers any mid-term services or other maintenance, if required

When to start looking for a new contract

You’ll still need to change your contract even if you stay with the same provider. Otherwise, your company will receive the more expensive out-of-contract business electricity rates.

With each contract, there’ll be a renewal window. This is a period of time (usually one-six months) prior to your current contract expiring in which you can start the research and comparison process to find a new alternative.

Similarly, if you receive a letter detailing your supplier’s renewal offer, you can then start comparing potential new contracts and providers.

Note that if your current contract expires and you continue to use electricity from the same supplier, you’ll enter into a rollover contract, which is likely to be more expensive.

The research also found that the smallest businesses (those with fewer than five employees) were more likely to allow a rollover contract to occur.

If you move into a new location and use the power, then this is known as a deemed contract – there isn’t a formal agreement in place but the supplier continues to provide power.

The report stated that 32% of businesses stayed with their current supplier so as not to incur exit fees.

Remember to read the terms and conditions of the contract. Be sure to pay close attention to these so you know what your business will be bound by. In particular, review the requirements for exiting and entering agreements.


Compare business electricity quotes

By reading this article, you’ve learned more about how business electricity prices are calculated, as well as what your options are when it comes to choosing a supplier. On top of that, we’ve provided more detail about how to research and compare tariffs and suppliers, as well as how to ensure a contract is suitable for your business.

So where do you go from here? The next step is to compare business electricity quotes. Startups.co.uk can help with this – simply complete the form at the top of the page to compare quotes.