Business Energy Guide
TABLE OF CONTENTS
- PRICES & BUSINESS ENERGY TARIFFS
- Fixed Rates & Terms
- Other Charges and Discounts
- WHAT SAVINGS CAN I MAKE?
- QUOTES & SWITCHING
- Five Steps to Switching Contracts
- Three Options to Get Live Energy Quotes
- CHOOSING THE RIGHT TARIFF OPTION
- BUSINESS ENERGY SUPPLIERS
- The Big Six/ Big Five Providers
- Smaller Independent Companies
- GENERATE YOUR BUSINESS ENERGY
The UK has a fully deregulated business energy market with over 50 suppliers offering competitive pricing for gas, electricity, and renewable energy products.
Much like with residential energy, the onus is on the bill payer to find cheap prices from the thousands of tariffs in the marketplace.
Prices & Business Energy Tariffs
You’ll get two prices for each fuel you use:
- A rate for each kWh unit of gas or electricity you use.
- Plus a daily or quarterly standing charge. Tariffs vary by supplier, region and the amount of energy your business consumes each year.
Fixed Rates & Terms
The majority of small and medium-sized businesses only have the choice of a fixed priced contract for the duration of the agreement. Most business energy suppliers now offer terms up to five years, but unit prices increase by a sizeable margin over a standard one-year deal although standing charges usually remain the same. The chart below illustrates this point more clearly.
Example Energy Prices for One to Five Years
Example rates from British Gas for a 03 profile electric meter based in region 10 (Eastern).
|Contract Term||Unit Price/ kWh||Price Premium||Daily Charge|
Below is the same data pictured graphically for a business using 15,000 kWh of energy each year.
Fixing your energy prices for five years means no hidden surprises on your rates, but you’re paying a 12.6% premium until unit costs increase.
Other Charges and Discounts
Although the default method of payment is by direct debit, all energy companies provide an additional discount when paying by this method. The discounts range from 2% to 6% depending on the supplier you choose.
All regular businesses pay 20% VAT on the prices quoted with Charities and not-for-profit enterprises paying 5%. These organisations are also exempt from paying the Climate Change Levy (CCL) where other commercial energy bills face an additional charge as follows:
Climate Change Levy (CCL) Rates
The table below shows the current CCL rates by fuel type. The rates increase by 45% for electricity and 67% for natural gas from 1st April 2019. Despite the large increases this change just adds £39.60 to an annual electric bill using 15,000 kWh per year.
|Fuel Type||From 01/04/2016||From 01/04/2017||From 01/04/2018||From 01/04/2019|
|Electricity (per kWh)||0.559p||0.568p||0.583p||0.847p|
|Natural Gas (per kWh)||0.195p||0.198p||0.203p||0.339p|
|LPG (per kg)||1.251p||1.272p||1.304p||2.175p|
|Other (per kg)||1.526p||1.551p||1.591p||2.653p|
What Savings Can I Make?
You can only shop around for a new deal at the end of your current contract. Although your renewal letter may show acceptable rates for the forthcoming year, you’ll always be able to find a lower tariff elsewhere. So never accept your renewal letter offer and follow our switching guide below.
Never accept your renewal letter offer as you’ll always find cheaper prices elsewhere. A quick comparison of the market will show your savings.
Quotes & Business Energy Switching
To keep your commercial energy bills as cheap as possible, you need to switch tariffs at the end of your contract. The switching process doesn’t mean you need to change your supplier, but will allow you transfer to the lowest rates on the market.
When you’re about three months before the end of your current agreement you need to notify in writing that you wish to end the contract. Once you’ve sent that notification, you can start searching for the best deal in the market.
Five Steps to Switching Contracts
- Step 1: Cancel your existing contract if it’s within three months of ending.
- Step 2: Get new quotes from all market operators for electricity and gas.
- Step 3: Select the tariff most suited for your needs.
- Step 4: Sign your new contract for the next one to five years.
- Step 5: The switch happens automatically and managed by your existing and new provider.
Your power supply is never interrupted during a switch. You will receive a final bill to cover your existing contract and a new one approximately one month after your new start date.
Just remember to take meter readings on the day you’re switching to keep your bill accurate.
Depending on your meter type, you may be offered a new smart meter to replace any legacy meters. This change means the meter gets read automatically by your supplier to reduce errors in billing. Note that not all smart meters are compatible with all the energy companies so you may not be able to change supplier at a future date.
Three Options to Get Live Energy Quotes
For B2B energy quotes, you have three options to produce quotes:
- The DIY approach where you search yourself.
- Use a price comparison website.
- Utilise the services of a professional energy broker.
Here are those options in more detail.
Option 1: Find Deal Prices Yourself
It takes time to search the entire market as there are 53 suppliers to visit their websites or call the sales teams. You may not receive the best prices as some consolidators and brokers may have an exclusive deal not generally available.
Additionally, you may find that if you call back after a few days, the price could change depending on any movement in wholesale prices or other external forces.
Therefore, we recommend businesses use one of the following routes to market.
Option 2: Using Price Comparison Websites
Conducting comparisons online is part of our daily lives now, and the business gas and electricity market is no different. Many allow you to view a subset of the whole market immediately, while others connect you with a broker to guide you through the switching process.
Our online service shows the average percentage savings you could make by moving your business to a different contract. There are never any charges for these services.
Option 3: Utilising Energy Brokers
Outsourcing the process to an accredited business energy broker will save you time because they use bespoke technology platforms to quote the entire market on your behalf.
These brokers can also manage your contract submissions, conduct invoice validation analysis, and ensure you’re always on the best tariff for your meter. There are no charges for these services as they receive a commission directly from your new supplier.
Just ensure you obtain new quotes for all your meters and switch to a lower-priced deal rather than letting your contract roll over at higher rates.
Choosing The Right Tariff Option
For the majority of customers, it’s a straightforward choice of selecting the lowest price offered by the market or broker. Your supply pipes and cables won’t change, it’s just the company name on your new invoice.
When comparing prices, look at the total cost for the year including the unit price per kWh and the standing charge. This comparison is especially important for low consumers of electricity as a high standing charge could erode any savings made on the unit cost.
High consumers of electricity or gas, such as multi-site operations or those with a half hourly meter installed may require additional support to manage their energy efficiency so the lowest cost may not be the most important factor.
Business Energy Suppliers
You have a choice of 53 different suppliers when switching your business energy contract. These are made up of the traditional multi-national companies, newer entrants and smaller independent companies.
The Big Six/ Big Five Providers
Traditionally just six business energy suppliers controlled 90% of the B2B space, but gradually other companies are starting to make an impact.
Two of these companies, SSE and Npower, announce a merger so if that progresses just five organisations will control the market.
The current “Big Six” business gas and electricity suppliers are as follows:
Market share data source: https://www.businesselectricityprices.org.uk/suppliers/
Smaller Independent Companies
The list of the current 35 independent power companies for businesses.
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Renewable Energy Suppliers
All the suppliers below offer 100% renewable energy tariffs. Most generate their power with wind farms, solar power, hydroelectric or biofuels. For those companies supplied by non-renewable sources, these suppliers match the consumption with a Renewable Energy Guarantee of Origin (REGO). The REGO is a unit of sustainable power generated for the National Grid matched to each kWh unit supplied from traditional sources such as coal, natural gas or nuclear. Below is the current list of 12 renewable power companies.
- Ørsted/ Orsted formally Dong Energy with the ultimate holding company based in Denmark
- Bulb (London)
- Ecotricity (Stroud)
- Energia (Belfast)
- Good Energy (Chippenham)
- F & S Energy (Chelmsford)
- Green Energy UK (Ware)
- Hudson Energy (USA)
- Solarplicity Group formally known as LoCO2 Energy (Rickmansworth)
- Octopus Energy (London)
- SmartestEnergy (Japan)
- Vattenfall including iSupplyEnergy (Sweden/ Bournemouth)
Generate Your Business Energy
With the long-term trend on wholesale prices, government green levies and investment only continuing to increase, perhaps now is the time to consider generating your own electricity supply?
Most of today’s options gear themselves towards renewable systems that don’t use fossil fuels and don’t produce any harmful carbon dioxide into the atmosphere. In addition to the environmental benefits, you can sell any electricity you don’t use to the National Grid using feed-in tariffs.
You may also be eligible for some form of a grant or low-cost loans for your green investment. You can choose from solar power, wind turbines, Ground Source Heat Pumps (GSHPs), or biomass.
Conclusion for Commercial Energy Customers
The bare facts of keeping bills low are to ensure you change your contract when it’s due for renewal. You have several options to assist you in keeping pace with the competitive nature of the market and avoiding the high increases in prices if you do nothing.
Call our UK-based utility team on 0800 690 6008 or use the quote form at the top or bottom of this page for instant prices for your business today.