Best Small Business Electricity Rates and Suppliers for 2023

Rising electricity costs mean SMEs are facing an energy bill cliff-edge this winter, as analysts predict oil prices will reach $100 a barrel later this year. This outcome could also be worsened by the unfolding situation in the Middle East.

Despite the chaos, the government's Energy Bill Discount Scheme is still scheduled to end on March 31 2024. SMEs are hoping that November's Autum Statement will bring good news. Until an announcement is made, however, now is the time for businesses to ready themselves for a rise in winter energy usage.

Finding a “cheap” provider may feel impossible at the moment, but it can be done. With proper research, you can lock your business into an affordable package with flexible rates that will reduce pressure on cash flow. These include:

We've crunched the tariffs and customer feedback on suppliers including EDF Energy and Octopus to help you find the best business energy rates for 2023. For a direct recommendation, use our free online tool to 🔍compare electricity supplier deals.

Whether you’re looking to switch immediately, or planning ahead for when your contract ends, this article will guide you through the top electricity suppliers for SMEs. We'll outline how much they cost, as well as expert insights from industry leaders to advise on energy bill cost saving.

Can you still find cheap business electricity rates?

Due to almost 18 months of record-high inflation, “cheap” isn’t a word being used much these days. Still, it is certainly possible to find cheaper business electricity rates by comparing provider offerings. Business owners just have to be savvier than they might have been previously.

Various factors can influence the overall cost of an electricity bill, so there isn't a one-size-fits-all approach to ensuring you always have the best rate. Having said that, here are some general cost-cutting tips:

• Pay by direct debit or PAYG: providers like EDF Energy offer discounts when customers pay this way
• Look for startup-specific plans: some offer more flexibility, shorter contract lengths, or zero exit fees
• Consider consumption – some suppliers/tariffs offer discounts based on when you use the most/least amount of electricity
• Assess all options – don't just accept a renewal offer, it’s wise to weigh up all the options available

Another option is to use our bespoke cost comparison tool designed specifically for small businesses. Simply tell us about your commercial electricity needs, and you can 🔍compare quotes from a range of business energy brokers to find the right plan for your organisation.

UK business electricity rates by supplier

In the table below, we’ve profiled three of the best electricity suppliers for small businesses*, including details specific business needs that each supplier is best suited for.

We compiled this list by selecting providers based on the quantity and quality of their Trustpilot reviews and ratings, and have only considered providers with at least 1,000 reviews and a ‘great’ or ‘excellent’ rating.

*Costs are based on a one-year fixed rate tariff for a customer in London using 18,000 kWh of energy per year. All pricing is accurate as of September 2023.

Octopus Energy: best for low-cost, renewable energy

Octopus Energy, like most other providers, offer specific fixed tariffs which are ideal if you want to know just how much you’ll be paying for electricity over the course of a year. These tariffs may feel especially welcome for small business owners at this time.

Based on the average fixed rate for a customer in London using 18,000 kWh annually, Octopus quoted us a very wallet-friendly 26.26p per kWh, but an expensive standing charge of 37.72p in September 2023. That makes it a good choice for companies that have high usage, like fully in-office workplaces. Other plans include:

• ‘Electric Supply’, designed specifically for charging businesses that provide charge points for electric vehicles, which gives you cheaper prices whenever your charge points are used outside of peaks – and
• ‘Panel Power BETA’, designed specifically for solar panel businesses which gives you combined energy at 15p/kWh* for every unit you export.

Octopus takes an advance payment as a safety precaution against unreliable customers or unforeseen circumstances. This is usually equal to one month’s estimated energy cost, however it can be up to three months depending on your credit score.

Any money taken will be held until the end of your contract and will not count towards your energy bill, but will be returned to you once your account balance is fully cleared at the end of your contract.

Octopus Energy: hidden fees and charges

Octopus scrapped exit fees in July 2023 to help firms navigate the end of the Energy Bill Relief Scheme. As a result, no Octopus plan – even the Flexible Octopus tariff – has any exit fees or termination periods.

Be aware that any late payments will also incur a charge from Octopus. The company will charge you £15 for the first missed payment and £20 for each missed payment after that.

Customer service

We think Octopus Energy goes above and beyond for its customers. At the height of the energy bill chaos last September, Octopus was one of the only suppliers to offer customers on its standard variable tariff a 4% discount to help combat fuel poverty. Its stability was also proven by its acquisition of industry giant Bulb, which went bust in October.

Octopus Energy's customer support options include email and phone, along with online customer accounts. It also offers a smooth switching process, with no need for engineer or installation visits, and no disruption to your power supply.

User reviews

Octopus Energy has collected an impressive 116,000+ reviews on Trustpilot, garnering an ‘excellent’ rating and a score of 4.8 out of 5.

Eco-friendliness

Providing 100% renewable electricity across all its tariffs, along with dedicated products for charging and solar businesses and vertical farms, Octopus Energy has an incredibly strong green electricity offering.

Unlike competitors like EDF, Octopus Energy makes it clear exactly how much you'll save by switching to a green tariff. That's why we think it's the best option for eco-friendliness.

Utilita: best for extras and add-ons

Utilita mainly supplies electricity to business customers via smart and prepayment meters. While smart meters are a very welcome way to track your energy usage, there has been recent scrutiny around how prepayment meters may ultimately disadvantage users, especially amid rising wholesale costs.

Based on a one-year fixed rate tariff for a customer in London using 18,000 kWh, Utilita quoted us 26.6p per kWh. This is similar to Octopus, but with a more expensive standing charge of 40.08p per day. We recommend Utilita for firms wanting access to a flexible payment option. For example, hybrid businesses.

Utilita's “one price fits all tariffs” include:

• 12 or 24 month fixed price contract for both electricity and gas
• Same price whether you pay by Pay As You Go, by Direct Debit or to Pay on Receipt
• Flexi Pay means you can switch how you pay at any time
• Free smart meter with Smart Energy Monitor
• Out of Contract / Deemed Electricity Prices: 35p/day standing charge

Beyond the flexible financial add-ons, Utilita also offer an entire range of other add-ons to keep their customers happy. From Utilita Rewards, which lets you earn credit to spend on energy, to Utilita Extra which offers lifestyle-related add-ons such as weekly giveways, prize draws, shopping and concert tickets.

Utilita has tried to make their prepayment meter system as convenient as possible for customers: you can top up online, over the phone, via their app, by SMS or at any PayPoint location. Additionally they offer Emergency and Friendly Credit so you'll never run out of credit at night, over the weekend or during bank holidays.

Utilita: hidden fees and charges

Utilita does not charge any switch or exit fees. That said, there are some late payment fees to be aware of in the event that you are unable to pay your monthly bill:

• 14+ days late = £10 charge
• 23+ days late = £30 charge

On top of this, there is an £8 charge if your Direct Debit payment fails and is returned. If it gets to the point that a meter has to be fitted, there will be a £150 additional charge.

Customer service

Utilita's customer service team is available by phone, from Monday-Friday between 8am and 6pm, and an online form is also available.

But it's Utilita’s energy hubs that are its stand-out feature, with the hubs being physical locations in communities all across the UK. Here you can speak to a dedicated Energy expert face-to-face about any struggles and concerns about your bill.

User reviews

Utilita has amassed more than 59,000 reviews on Trustpilot, along with an ‘excellent’ rating and a score of 4.4 out of 5.

Eco-friendliness

Utilita’s main eco-friendly approach is to encourage individual behavioural change amongst their customers, and by decarbonising the emissions from the day-to-day running of their company. On its app, the supplier also offer insight into your ‘Smart Score’: a measurement of how energy efficient you are, based on how you use energy at home.

No green tariff is available, however. That's partly why, in Which's November 2022 survey of the best green energy providers, Utilita scored 10% and placed second from bottom out of 21 providers.

EDF Energy: best for ‘Big Six' supply

The Big Six is the nickname given to the group of largest energy suppliers in the United Kingdom: British Gas, EDF Energy, E. ON, Npower, Scottish Power, and SSE. Choosing a Big Six Supplier has its pros and cons, but often people end up choosing them because they are the most well-known, advertised, and trusted.

Based on a one-year fixed tariff for a customer in London using 18,000 kWh annually, EDF Energy quoted us 26.6p per kWh, with a standing charge of 25p per day. That means it is the cheapest option in this list for seasonal businesses and a great option for those that won't be using electricity for several months of the year.

While most of the other brands featured in this guide are smaller energy suppliers, we’ve included EDF as the best for big six supply. Your tariff rates are determined by your:

• Type of tariff – you'll pay lower rates when you choose an online-only tariff, compared to a full-service tariff that gives you access to call centre support.
• Length of tariff – when you choose a fixed tariff, you'll pay a little more for the security of fixing your tariff rates for longer.
• Payment method – you'll pay lower unit rates when you pay by Direct Debit and Pay As You Go, compared to Cash/Cheque.

EDF Energy: hidden fees and charges

Unlike Octopus, EDF Energy does not charge any exit fees if you leave your contract early – so long as you give at least 49 days notice. If you miss a monthly payment, EDF Energy will charge you a £10 late payment fee.

User Reviews

According to their page on the new energy bill government support, EDF claim that to support their customers further in these tougher times they are increasing their customer service teams, investing more into their customer care training program and “bringing forward” £20 million to spend on energy efficiency measures for fuel poor households this year, with a package of free energy-saving measures for eligible customers.

Customer service

EDF has managed to maintain a steady 38,000+ reviews as of writing this and a ‘great’ 4.2 / 5 rating. User reviews typically cite EDF’s attentiveness in phone conversations and that they promptly solve issues. Ultimately, for the most part, they remain a stable and trustworthy company.

That said, the company's reputation somewhat suffered since a scandal in March 2021. Following an investigation by Ofgem, the company announced it would refund around 70,000 of its customers a total of over £500,000 after overcharging them when they switched supplier.

Eco-friendliness

EDF offers four green tariffs for business electricity depending on how dedicated your company is to the sustainability mission.

Which's November 2022 survey found that just 19% of EDF's fuel is renewable, versus 63.1% nuclear. Still, it scored 30% overall in Which's ranking, which is three times better than Utilita.

The supplier has also pledged to invest £4.5bn in 2023 into low carbon electricity, signalling a shift towards more sustainable practices that mean it could rival Octopus' green credentials in a year's time.

How has the war in Ukraine affected electricity demand and pricing in 2023?

Almost a year and a half on from the war in Ukraine, and the conflict has generated a sharp increase in utility bills. Business electricity rates have been spiralled as a result. One business owner told Startups that they have had to move online as a result of unaffordably high overheads.

Things appeared to be improving. But as winter approaches, the problem is back. Brent crude, the oil price benchmark, rose to a 10-month high in September 2023 of almost $94 a barrel – up from $72 a barrel at its lowest point in June.

That's the biggest quarterly increase since the Ukraine invasion, and comes as a result of Russian and Saudi Arabian oil production cuts.

Although the UK only receives around 3-4% of its gas and electricity from Russia, the country is the leading exporter of natural gas and the second largest exporter of oil (with Saudi Arabia second). This has resulted in a global shortage of oil and sent wholesale electricity costs shooting upwards.

The worst part for UK businesses is that there is no price cap on business energy. The Energy Bill Relief Scheme gave business owners financial support with their energy bills for six months from October 1. However, this ended on April 1.

Replaced with the Energy Bill Discount Scheme, companies will now receive an automatic reduction on their bills of up to £6.97 per MWh (megawatt hour). Smaller firms with energy costs below £107 a MWh for gas and £302 a MWh for electricity will not receive any support.

What’s the annual cost of commercial electricity for a small business?

Below is an indication of what small businesses can expect to budget for electricity costs on a yearly basis. These figures are correct as of March 2023, and taken from the Quarterly Energy Prices 2023 Quarter 1 document published by the Department for Business, Energy & Industrial Strategy.

Do small businesses pay more for business electricity than big businesses?

The Quarterly Energy Prices document shows that the average price for electricity between January and March 2023 was 21.51 pence per kWh, up by 23% compared with January to March 2022.

However, this increase surges to 54% when we exclude medium businesses. On average, small firms pay around 1.5 pence per kWh more than medium companies. Very small businesses pay the most amount at 26.55 pence per kWh.

These prices also exclude the CCL (Climate Change Levy), which is one type of environmental tax that your business may be subject to.

Because small businesses can expect to pay a lot more for their electricity than medium or large businesses, it’s even more important to ensure that you get the best fit for your business when selecting a tariff.

Fortunately, with our 🔍quick and easy quote comparison service, we can offer you access to a range of business energy providers, who can help you make the right decision for your business and budget.

Types of business electricity tariff

An energy tariff is the type of charge you pay for your gas and electricity use. There are two main types: fixed rate and variable, then the less common flexible, deemed/out of contract and eco-friendly.

Knowing which tariff you’re on – or want to be on – can save you a lot of money. You’ll be able to see which types each provider can offer, and 🔍compare costs accordingly. Here, we explain some of the most common tariffs, and their pros and cons:

1. Fixed tariffs

With a fixed tariff, the unit price remains the same for a set period of time. This is usually between one and three years, although it can be as long as five years. This means you’ll know for certain how much per kWh you’ll be paying for your electricity within your fixed period of time.

If the market rate should increase, then you will get to enjoy the benefits of a lower rate than newer customers. However, if this rate should decrease while you’re still in contract, then you won’t benefit from any price drops since the price is fixed at the market rate you started the contract on, and not current events.

The biggest negative when it comes to this kind of tariff is that it can be difficult, as well as expensive, to leave these types of contracts before the agreed end date if you should wish to for some reason.

This type of tariff is ideal for businesses that are likely to have similar levels of electricity usage (and budget) over the next few years, so that they can weather any increases or decreases in price based on the market rate.

2. Flexible / Variable tariffs

Variable tariffs are usually short-term, so you have greater freedom to switch suppliers when needed. They are typically most suitable for businesses that need to prioritise flexibility above all else, making it a good match for seasonal firms or those that are just starting out.

As mentioned, the energy bill market rate constantly fluctuates. With this tariff, your unit price fluctuates with it. When wholesale electricity costs go up, as we have been seeing already through this cost of living crisis and the devastating war in Ukraine, so does your energy bill.

3. Deemed/out of contract

Your business will be put on this ‘tariff’ if you don’t have a contract. These are often the most expensive rates, meaning it’s usually cheaper to have a contract of some kind in place.

Due to the high costs involved, no business should choose to be out of contract. But if you’ve just moved into a new premises and need an electricity supply straight away then you’re likely to find your business automatically put onto this type of tariff. Moving to a fixed or variable tariff should be your first step in this scenario.

Eco-friendly

All businesses could benefit from doing their bit to help the planet, but an eco-friendly tariff is especially welcome for businesses who are focused on an eco-friendly or ethical stance. You can include it in end-of-year reporting and marketing materials to demonstrate your commitment to the UK's mission to be Net Zero by 2050.

The benefits of this tariff extend not only of course to the environment. It also helps to maintain a positive business reputation and image. One disadvantage of this type of tariff is that they may not be as cost-effective as other energy contracts. 

Understanding a commercial electricity bill

Business electricity prices are influenced by several factors, including the size of the premises, the number of people in the building, the amount of electricity consumed, and the location(s) of the business. Other factors include your company’s credit score, and any installation charges.

Your electricity bill will be split into two parts:

• Unit cost – measured in kWh (kilowatt hours), this is the amount paid per unit of electricity used by your business
• Standing charge – this is a daily fee that goes towards network maintenance

Note: The unit cost is usually lower on a business electricity plan, but the VAT is higher at 20% (as opposed to 5% for domestic users).

Other charges/terms that might appear on your bill include:

• Agreed supply capacity – the maximum demand that a business needs from its supplier, ensuring that amount is continuously available. Important if you are a manufacturer that uses lots of electricity.
• The billing period – the period of time that a bill will cover (can be negotiated for favourable terms)
• The renewal window – a 60 or 120-day window at the end of the contract, giving you time to switch

Key considerations when comparing commercial electricity suppliers

If you want to do some further research into the above providers before, we recommend you analyse each supplier based on four specific metrics:

1. Review potential discounts

These incentives will often be in the form of a direct debit discount, offering electricity at a reduced rate, as long as you have a direct debit account set up with the provider.

However, this might not be offered by every provider, and paying by direct debit might not work for every business. In short, always read the small print of any contract. That way, you’ll know exactly what’s going to come out of your account, and when.

2. Check out customer service ratings

Friendly, helpful people on the phone lines are essential, as is an efficient chatbot /email response rate. It also helps for providers to offer a plentiful amount of information online – if a company’s online resources are looking a little thin on the ground, this could be a warning sign.

3. How green is your provider?

If keeping it green is important to your company’s image, you’re going to want to do a little digging into how electricity providers generate their power to see if this aligns with how you’re running your business.

Review how much electricity is generated from renewable sources (100% is perfectly feasible), along with what impact it will have on your sustainability reporting. Will you be able to report zero scope 2 carbon emissions, for example?

Sarah Merrick, founder and CEO of Ripple Energy states: “Wind and solar are both the greenest, and now the UK’s cheapest sources of electricity. Make sure you choose a supplier that directly contracts with renewable generators, like Octopus Energy.”

4. Search for add-ons and extras

Some suppliers provide the power, and that’s it. Others – like Utilita – come with an app, all sorts of advice, and a whole host of other things to accompany your business electricity plan.

An app can be useful in showing you quickly and easily where your business’s weak-spots for efficiency lie. This will help you make your business leaner by cutting down excessive, and unnecessary, electricity charges.

Regional business electricity price variation

Electricity prices can vary considerably between regions. This is caused by a number of factors, including the demand for power in the area, and the cost of distributing it.

For example, the figures below are for our cheapest electricity provider, Octopus' pricing*.

*All pricing is based on a business using 18,000 kWh per year, and is correct as of September 2023.

How to switch business electricity suppliers, and why

Switching energy suppliers can help your business to save money, as you can find the very best deal for your current energy requirements. It can also help you to avoid being out of contract and subject to out of contract rates, which as discussed above are often considerably higher than the rates of regular tariffs. Learn more with our guide on how to switch your business energy provider.

Summary

We’ve offered a selection of the best business electricity suppliers in the UK, including detailed pricing information. If it’s clear, easy to understand pricing that you’re looking for, Octopus Energy is still the best option in 2023. It's also the standout provider for renewable energy.

Securing a cost-efficient commercial electricity plan has always been important for small businesses, who tend to pay more for their business energy than large firms. With slowed production in Russia set to push up global oil prices once again this winter, there’s even more reason to keep a close eye on your business electricity costs.

While reviewing unit prices and standing charges can help you to get cheap business electricity deals, you should also consider the type of tariff and any available discounts – along with how the electricity is measured and charged – when deciding on a plan.

Startups has more than 20 years’ experience of helping small businesses. We’ve used this expertise to create a 🔍free quote comparison service that connects you with business energy brokers, who you can task with finding the most cost-effective electricity tariff for your business.