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Your energy tariff sets out how your supplier will charge you for the gas and electricity you use. Businesses have more choice then ever before when it comes to the types of tariffs they can switch to. This can make it difficult to know which tariff will suit your specific needs.
Why is it important to compare business energy tariffs?
Choosing the right energy tariff can help you get the most out of your business energy and save money in the long run.
If it’s been a few years since you compared energy tariffs, you’re likely to be on a default energy tariff. This means you will have no little control over how you’re by your supplier and you could be significantly overpaying for the gas and electricity you use.
By comparing energy suppliers, you can find a cheaper gas and electricity deal on terms that fit your requirements.
What are the common business energy tariff types?
The most common energy tariff types are:
- Fixed Price
- Variable Rate
- No Standing Charge
Choosing the right energy tariff can depend on how you want to pay for your energy, how you use energy and the type of meter your property supports.
Fixed Price Energy Tariffs
As you might expect, with a fixed rate energy tariff your unit price and standing charge will remain the same throughout the duration of your contract.
One of the main benefits of fixed price energy tariffs is consistent and predictable billing. Your energy prices will not be affected by any fluctuations in the market during your contract.
You will also have a variety of options on how long you would prefer to fix prices for. Fixed rate contracts most commonly last between 1 and 3 years.
It’s important to remember that your overall bill will not remain the same each month. Your monthly bill will still be dependent on the amount of gas or electricity you use in that period.
Although you are protected from energy price hikes, a fixed rate tariff means you will also miss out on any drops in prices in the energy market. If you lock into to a long-term fixed rate deal when prices are at their highest, you could be overpaying in comparison to market rates by the end of your contract.
Variable Rate Energy Tariffs
With a variable rate energy tariff, your unit price can rise and fall throughout the duration of your contract. This means that you could face very different energy bills month to month even when your usage stays the same.
Variable rate tariffs do offer a number of benefits to businesses. You’re likely to benefit from any price drops in the energy market as your tariff price will reflect the current state of the market.
Businesses are advised to switch to variable rates more often when energy prices are at the highest. Avoiding fixed rates as this point means you will see a reduction in your prices as the market returns to normal.
A variable rate tariff means you won’t find yourself stuck at the high price point for two to three years.
Before switching to a variable rate tariff, you should be confident that you would be comfortable with any increases in your energy prices. As prices can increase at any time, it’s important to know that you can cover potential cost hikes.
Multi-Rate Energy Tariffs
A multi-rate business energy tariff offers cheaper energy rates at certain times of the day. The most common types of multi-rate are Economy 7 and Economy 10 tariffs.
As the name suggests, an Economy 7 tariff offers cheaper rates for 7 hours each night. The exact off-peak hours will vary depending on your supplier. The most common off-peak times are between 12 midnight and 7am.
An Economy 10 tariff offers cheaper rates for 10 hours across a 24-hour period. Off-peak hours are often split into three blocks in the afternoon, evening, and overnight.
Multi-rate energy tariffs will often benefit businesses who operate outside of normal business hours. For example, a takeaway or bar which uses most of its energy in the evenings and at night could benefit from a multi-rate tariff.
However, it’s worth bearing in mind that your unit prices during peak times will be higher than on standard tariffs. This means if you use a significant amount of business energy during peak hours, your energy bills could increase.
No Standing Charge Tariffs
Your standing charge is a daily fee added to your energy bill to cover the cost of delivering your gas and electricity to your premises. Your standing charge will remain the same regardless of how much energy you use.
A no standing charge business energy tariff sets your daily to fee to zero. This means that if you don’t use any gas or electricity, you won’t face any charges from your supplier.
No standing charge energy tariffs are often beneficial to businesses that operate seasonally or only a few days week. As you won’t face any charges when you don’t use gas or electricity, you can reduce your costs in comparison to a standard tariff.
You should bear in mind that unit costs will often be higher on a no standing charge tariff. If you’re business has a high energy usage, you could end up paying more overall than on a standard fixed price tariff.
What to consider when comparing energy tariffs
With so many options now available, it’s important to consider how your business uses gas and electricity before you compare business energy.
The type of business you run can impact which tariff best suits your needs. For example, a seasonal business may benefit from a no standing charge tariff. However, if you run a large, high energy usage business, may prefer standard fixed or variable rates.
Small or micro businesses may benefit from the more consistent billing offered by a fixed rate tariff rather than a variable tariff which could see a quick increase in your unit rate.
Find the best business energy tariff for you
Here at Business Electricity Prices, we can provide your business with the advice you need to select the right tariff for you.
You can quickly compare energy suppliers using our free comparison tool and get access to a wide range of the latest business energy prices.
To start your switch today, simply complete our quick online energy comparison calculator.
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