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No business can afford to throw money away.At a time when consumer confidence is low, but competition is hungrier and fiercer than ever, your business needs to be lean and agile with no wasteful expenditure whatsoever. And while you should invest in areas that have a bountiful ROI or build value in your brand, there are some areas in which you can make cuts without compromising on the quality you build your brand upon. Comparing business energy prices online is one of those areas, and you may be surprised by how much you can save. Let’s explore how you can save time and money for your business.
Last update: March 2021
If you stop paying attention to your business supply, it’s easy for costs to spiral out of control. There are many reasons why you should compare business energy prices online. Especially if you don’t switch when your fixed rate tariff expires and you lapse into a costly and inefficient standard tariff on a “deemed contract”.
How to compare business electricity quotes
Switching business energy suppliers and plans is a little more complicated than switching your domestic energy. The principle is the same. As with your domestic energy, the energy is conveyed through the same network of pipes and cables. However, the contracts for business energy supplies are usually much longer and more restrictive.
Domestic energy consumers can switch at virtually any time they way, even if they have a fixed rate contract (and are prepared to pay a nominal early exit fee). However, business energy suppliers have to wait to change supplier until their contract enters the “switching window”. Your supplier will notify you when this window opens, but it can be anywhere from 1-6 months before your contract’s end date.
As soon as this happens, you should start comparing quotes from different energy suppliers so that you can start making energy savings as soon as possible.
There are several ways in which you can do this:
Approach energy suppliers directly for quotes
Unlike domestic energy tariffs, business energy plans are much more tailored to the customer’s needs. Rates are not published, but negotiated on an individual basis. How much you pay for the energy you use will depend on a number of factors, including:
- The size of your business
- Where your business premises is located
- How many premises you have
- Your gas and / or electricity usage
- Your peak energy load hours
- Your credit history may also be a factor. Some suppliers reserve their best deals for companies that are in good financial health.
If you have all of this information (and a recent business energy bill or statement) to hand, you have everything you need to start approaching business energy suppliers to get quotes. This is probably the best way to ensure that your quotes are well matched to your needs. However, this can be a very time consuming process. And, let’s be honest, you’re pushed enough for time as it is.
Go through a business energy broker
A business energy broker can take all the hassle and stress out of finding a business energy plan that suits your needs. They have good relationships with energy suppliers, and can usually get more advantageous rates than you might be able to get by searching on your own. Of course, they will take a modest commission from the energy they supply. However, they will generally save you more than they cost. Their commission will also be included in any quotes you get with no additional brokerage fees.
Use a price comparison site
Alternatively, if you’re looking for a ballpark figure of what different energy suppliers offer, there are numerous price comparison sites that can be used to compare business plans as well as domestic energy tariffs. You can either switch your plan through these comparison services, or approach suppliers directly when you have an idea of what you’d pay (and save) with them.
Once you’ve got a quote that you’re happy with, your new energy supplier will sort out all the finer points of the deal with you, and arrange for the switch to take place.
More than ever, our team of experts remain on deck to help you make savings on your energy. We understand how deeply the lives of many are affected by these trying times and we want to support you the best we can. More on your energy supply during COVID-19 in our article.
What suppliers provide business energy tariffs?
In the UK there are over 50 active energy suppliers on the market. A great many of which offer business energy tariffs as well as domestic energy plans. All of the UK’s Big 6 suppliers (British Gas, Scottish Power, E.On, EDF, NPower and SSE) offer business energy plans, as do many of the UK’s small and medium-sized suppliers. There are even a number of companies that offer energy plans exclusively to businesses.
The energy market is fast-moving and in a constant state of flux with energy suppliers rising, merging, going out of business and expanding their offerings all the time. However, at the time of writing, all of the suppliers below offer energy plans for businesses:
- Axis Telecom
- British Gas
- CNG Energy
- Crown Gas & Power
- Good Energy
- Octopus Energy
- Opus Energy
- Shell Energy
- Simple Gas & Power
- Total Gas & Power
- United Gas and Power
- Utility Warehouse
- Xcel Energy UK
- Yorkshire Gas and Power
What business electricity tariffs are available?
Although business tariffs are not as cut and dried as their domestic counterparts, they do tend to fall into the same categories. These include:
- Fixed rate tariffs (usually over 1, 3 or 5 years)
- Variable or tracker rate tariffs
- Green tariffs (as above but with guaranteed 100% renewable energy)
Most business energy suppliers also offer rates that are exclusive to enterprise-level companies that are much more bespoke and tailored to your needs and usage.
What costs make up your business electricity bill?
The better you understand the component costs that make up your energy bills, the better positioned you are to identify areas where savings can be made. Your business bill is broken down accordingly:
These are the costs for each kilowatt hour (kWh) of energy you use. Unit costs for business energy plans are generally much lower than their domestic counterparts, especially for larger and enterprise-level businesses. This makes sense, of course, since most businesses use a great deal more energy than the average household.
Most (but not all) business energy plans will also include standing charges. These are essentially the fee that the supplier gets for providing you with electricity. It covers all the myriad costs that come with running an energy company, as well as accounting for most of their (modest) profit margins.
Climate Change Levy (CCL)
Unlike domestic energy consumers, business energy consumers have to pay a Climate Change Levy on any energy they use that comes from non-renewable sources such as coal, oil and even gas. This is reflected in your energy bills. This is paid on electricity, gas and any liquid or solid fuels your business uses (such as LPG, lignite or coke).
However, your business is exempt from the CCL if:
- You are a microbusiness that uses less energy
- You are a non-profit organisation
- You are using 100% renewable electricity
The final component of your business electricity bill is VAT. While domestic energy consumers pay VAT at 5%, most business energy consumers are taxed at the standard rate of 20%. Although this is technically a B2B transaction, unfortunately, you cannot claim back the VAT you pay on your business energy.
However, there are a few exemptions here, too. You can qualify for reduced VAT if:
- You are a charity or other non-profit organisation (e.g. a care home)
- Your premises is “mixed-use” (i.e. both a business premises and a private residence).
- You are small enough to be classed as a microbusiness.
How do I know if I’m a microbusiness?
Microbusinesses are exempt from the Climate Change Levy, even if the energy they use is not renewable. They also benefit from reduced VAT at 5%. The definition of a microbusiness is that you:
- Use less than 100,000 kWh of electricity a year OR
- Use less than 293,000 kWh of gas a year OR
- Have fewer than 10 employees or an annual turnover of less than €2 million.
By rule of thumb, if you spend less than £1,000 a month on your energy bills, the chances are that you’re classified as a microbusiness.
Can I get a business Feed in Tariff?
Many businesses generate their own energy through PV solar panels, micro hydropower or small-scale wind turbines. When these businesses generate a surplus of energy, they can feed it back into the National Grid, and their energy supplier pays them for the energy they generate.
The mechanism by which business consumers are paid for the energy they generate is called Feed in Tariffs. However, as of 2019, they are unavailable to new customers. They have been replaced by the Smart Export Guarantee, which is functionally the same, albeit with different (slightly lower) rates.
Can I get a smart meter for my business?
Yes, absolutely. A smart meter is free to install, and the downtime required is fairly minimal. A smart meter can transmit your energy usage directly to your supplier. This can prevent estimated bills from creating a drain on your cash flow. With a smart meter, you only pay for the energy you use. Smart meters are slowly replacing AMR meters as they communicate both ways and transmit more information. However, if your business is larger than a microbusiness, you can choose to have either a smart meter or an AMR meter fitted.
What are the different steps of a business energy switch?
A business energy switch may seem like an upheaval that you can do without. However, it is a relatively quick and stress-free affair, and one that can save you a significant amount of money when you switch regularly. There is no disruption to your supply or downtime. As with your domestic energy supply, your new supplier liaises with your former supplier and they arrange the logistics of the switch between them.
The steps to a business energy switch are as follows:
- Compare business energy plans (on your own, via a price comparison site or through an energy broker)
- Choose a plan that you feel will be a good fit for your needs
- You may want to negotiate a deal with your supplier. For instance, most will offer you a discount if you pay by Direct Debit. While dual rate tariffs don’t exist for business plans, you may get a discount if you choose the same supplier for both gas and electricity.
- Inform your current supplier of your intended switch. Make sure that you are within your switching window, and send a termination letter by recorded delivery
- Your new and old suppliers will now get the ball rolling. The switching process usually takes 4-6 weeks, however if your business has complex energy needs it may take up to 8 weeks.
- Send final meter readings to your old supplier and you will receive one last bill to cover the interstitial period before your new supplier took over.
What information do I need to switch business electricity?
In order to ensure optimal savings and accurate billing, it’s a good idea to supply any prospective new supplier or energy broker with the following information when comparing business energy prices online:
- Your current supplier’s name
- Your current tariff name and contract end date
- Your supply type (electricity, gas or both)
- How much energy your business uses, either in kWh or pounds
This should be enough to let you know the right plan for you, and how much you could save.
How to get the best deal for your business
A Competition and Markets Authority survey revealed that approximately 40% of UK businesses have never switched energy suppliers. That’s a lot of businesses throwing money away on expensive deemed contracts. If you’re actively looking for better deals, you’re already doing more than almost half of the business owners out there. However, to ensure that you’re getting the best deal for your business, it’s important to:
- Start looking for a better deal as soon as your switching window opens. You don’t want to jump to the first tariff you see out of desperation.
- Take the time to compare a wide range of quotes. You may be surprised by how much variation in cost there is between suppliers and tariffs.
- If you don’t have the time to compare quotes yourself, consider going through an energy broker. They will usually save you more than they cost.
- Haggle with suppliers. And don’t be afraid to put the phone down on “I’ll think about it”.
- Choose a renewable supplier or tariff. Price differences are usually negligible, and you could save money on the Climate Change Levy.
Increase your savings by switching energy suppliers at home, too!
As important as it is to make savings on your business energy, there’s no reason why you shouldn’t be making savings on your energy at home. The average household could save over £300 per year by switching regularly. We can scour the energy market to find the best deals for your household completely free of charge.
What’s more, we can even manage your switch for you from end-to-end, getting you cheaper, greener energy fast and hassle-free.
Read more about business energy in these related articles
Updated on 31 Mar, 2021