A business electricity bill is built from a unit rate, the price for each unit of energy used, and a daily standing charge, both set by the tariff. [1] The sources used here give no price per kWh, so the rate on a contract or bill is the figure to read, and comparing offers may identify a better deal. [2]
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What do business electricity charges cover?
A business electricity bill is built from a unit rate, the price for each unit of energy used, and a standing charge. The standing charge is a fee paid each day, even if no energy is used on that day. [1]
No single figure in the sources used for this guide fits every business. Whether a bill is worth reviewing for business energy prices may start with the tariff, the contract and the meter, which are the details a new supplier asks for or a business should check before switching.
What does 1 kWh of business electricity cost?
The cost of 1 kWh is the unit rate on a business's own tariff, and that rate is agreed in the contract. The cost of 1 kWh is the unit rate on a business's own tariff, so the current contract or bill and any new offers are the figures to compare.
See also the guide to switch business energy supplier.
Behind the unit rate and standing charge sit wholesale costs, network costs, and operating, debt and industry costs. Policy costs, such as government social and environmental schemes, also feed in, along with the type of meter installed and the way the bill is paid. These costs can go up or down, for example because of the price of buying energy, and that affects the bill.
The practical step is to read the unit rate and standing charge on the latest bill or contract, then compare like with like when a quote arrives.
How much is commercial gas per kWh?
Gas is charged in the same way as electricity, with a unit rate for each unit used and a daily standing charge. No gas price per kWh appears in the sources used for this guide, so none is given here.
The type of energy, for example gas or electricity, is one of the things the charges are calculated from.
The annual gas a business uses also matters when contract protections are decided. The next sections explain how size and contract type fit in.
Who is the cheapest business electricity supplier in the UK?
No supplier can be named as the cheapest for every business. Energy suppliers can charge different costs for energy, so a business may look around for the best deal that meets its needs. The best option may be with the current supplier. [2]
Offers can come directly from suppliers or through an intermediary such as a price comparison website or energy broker. A comparison website may receive commission from energy suppliers or other sources, which is worth checking before relying on its ranking.
Some brokers charge an upfront fee, but most are paid a commission by the energy supplier chosen. A broker paid by a supplier must be a member of an approved redress scheme. Asking a broker how it is paid, and whether commission is included in the price, helps a business judge a quote on its merits.
How do contract type and business size change what a business pays?
Fixed rate contracts fix the price of unit rates and standing charges for the length of the contract. With a variable-rate contract, the price paid for energy can increase or decrease during the contract period. [3]
Some suppliers move a business onto out-of-contract rates if its fixed-term contract ends without a new deal being agreed. Like deemed rates, these are usually more expensive than fixed-term contracts. Some contracts renew automatically at the end of a fixed term if no new arrangement has been made, and the new term is usually 12 months and may be on a higher rate.
The type of contract available usually depends on the size of the business and how much energy it uses. A business can qualify as a microbusiness with fewer than 10 employees and an annual turnover or balance sheet total of no more than £2 million. It can also qualify by using up to 100,000 kWh per year of electricity or up to 293,000 kWh per year of gas.
What should a business check before agreeing a contract?
Before agreeing a contract, it helps to know what type it is, how long the term is, whether any fees apply, what protections apply and whether broker fees or commissions are included in the price. It also helps to know what happens at the end of the contract, such as automatic renewal or a move to out-of-contract or deemed rates.
Timing matters when changing supplier. For fixed-rate contracts, most suppliers will not let a business switch before the end of its contract unless it has already agreed a termination clause or pays an exit fee. A business can sometimes switch during the switching window without paying a fee. With a variable-rate contract, a business can switch to a new supplier at any time.
The existing contract states the notice to give and any exit fee, so reading it first gives the clearest view of what a change could cost.
Sources
Rates, thresholds and dates in this guide come from these sources. Check the source for the current figure.
- www.ofgem.gov.uk, How your electricity or gas bill is calculated | Ofgem www.ofgem.gov.uk
- Ofgem: switching business energy supplier www.ofgem.gov.uk
- Ofgem: choosing a business energy contract www.ofgem.gov.uk