Are you a small business looking for the best electricity prices in the market? Are expensive and inefficient business electricity suppliers getting you down?
If you are here reading this right now, then your answer is probably a resounding “yes”.
In fact, Ofgem recorded that 85% of all small businesses want to switch energy suppliers due to overpriced rates and unsatisfactory services.
Let us help you cut your electricity costs and run your small business more efficiently, by giving you the information you need.
In this guide, you will find everything you need to know about the best business electricity suppliers and the cheapest electricity rates.
2020 small business electricity prices
|Business Size||Average Annual Usage (kWh)||Average Annual Cost|
|Micro Business||5,000 – 15,000||£900 – £2,244|
|Small Business||15,000 – 25,000||£2,367 – £3,660|
|Energy Supplier||Unit Rate (p/kWh)||Standing Charge (p/Day)|
Note: The following above information is accurate as of date of publication (May 2020) and reflect each supplier’s rates for sample London E1 postcode and an average consumption of £200 per month or £2400 per year. The top six suppliers consist of the ‘Big Six’ energy suppliers that own most of the energy market share, while the rest are other popular independent suppliers. The above prices also exclude VAT (20%) and Climate Change Levy (CCL).
The Unit Rate is the price per unit of electricity that your business uses. This makes up the majority of your electricity bill and is multiplied by how much electricity you use.
The Standing Charge is the cost for your business to have access to electricity provided by the energy supplier. This is calculated in pence per day.
The Climate Change Levy (CCL) is a tax on energy for business users in the UK that encourages energy efficiency and reduced usage. The current CCL rate is 0.811 p/kWh.
Factors affecting your electricity cost
Let’s be honest. Running a business is a challenge by itself, and one of the primary concerns for every small business is keeping costs low. In fact, average business electricity prices rose by a whopping 11% from 2018 to 2019.
This is why you should know what factors are affecting your electricity cost and how you get cheaper electricity rates.
Small and Micro Businesses usually use a much lower amount of electricity than large businesses and corporations. For example, British Gas classifies small businesses as those that use less than £100,000 a year, and large businesses are those that use over £100,000 a year.
As a result, small businesses are not eligible for volume discounts given to businesses that consume and spend a much higher amount on electricity.
Fact: Small businesses are charged an average of 6.61p/kWh or 66% more on the Unit Rate than large businesses due to no volume discount.
Single vs. Dual fuel contract
Single Fuel Contracts are energy contracts with suppliers who only provide one type of utility for your business, such as electricity only or gas only. These contracts tend to be more expensive as the supplier cannot offer bundling deals.
Duel Fuel Contracts are energy contracts with suppliers who provide both electricity and gas for your business. This allows for a cheaper bundle rates, but would mean that you become more tied in with the supplier.
Contracts that are 1 to 3 years are normally fixed-rate tariffs that offer cheaper rates. The cheaper tariff is an incentive for businesses to stay with suppliers for a longer term. On the other hand, rolling contracts are monthly contracts that allow for more flexibility but are subject to variable-rate tariffs. Electricity prices can increase or decrease each month, which might not be ideal for some small businesses.
Your Energy Provider
How much you pay for your business electricity also depends on who your energy provider is. But with over 50 providers in the market, it is definitely a daunting task to select the best business electricity supplier.
You don’t have to guess, we have done the research for you and found the cheapest, most efficient energy suppliers for your small business. Simply get started by filling out this quick form and requesting your individualized quote.
Suppliers determine their prices in various locations around the UK based on these three factors:
- How much energy they already sell in that location
- How much they buy from generators in that location
- Charges imposed by local energy distribution network in that location
Regions in the UK with the highest prices include South Wales and Merseyside.
Regions with the lowest prices include East Midlands and Northern Scotland.
When your business operates is another factor in determining your electricity cost. Most electricity providers charge a higher rate for daytime use, because this is when the majority of businesses operate. However, if you are able to run your business at night then you will be able to take advantage of cheaper electricity rates.
Deemed vs. Out-of-Contract Rates
Deemed Rates are calculated when you move into a new premise. Upon moving in, you might not have an active contract with an energy supplier and are “deemed” to get your electricity from the previous supplier to the premises.
The solution to avoiding Deemed Rates is easy enough. Simply make sure that you have made arrangements for a contract with your top choice energy supplier before moving in.
Out-of-Contract Rates (or Extended Supply Rates) are electricity prices charged when you switch suppliers, but your current contract ends before the new one begins.
Unfortunately, Out-of-Contract Rates can be as much as double your regular electricity rate. Fortunately for you, these are easily avoidable if you keep a close eye on when your contract ends and make early plans to switch.
Fixed vs Variable rate Tariffs
Fixed Rate Tariffs are when you sign on with an energy supplier for 1 to 3 years and receive a pre-determined fixed price per kWh. Although they tie you into a fixed price, fixed rate tariffs allow you to budget for your small business.
Variable Rate Tariffs take advantage of market fluctuations on energy, so you can enjoy lower rates when the markets are favorable. However, variable rate tariffs can subject your business to potentially higher rates. They also allow for greater flexibility with monthly rollover contracts.
How to find the cheapest business electricity prices
By looking at the business electricity price table above, it is clear to see that comparing rates is essential to find the cheapest prices.
However, most small businesses don’t have the time or resources to compare between 50+ suppliers in the market. In fact, 38% of businesses feel it is too time-consuming while 35% believe it is too much of a hassle.
But the reality is that keeping costs low is an important aspect for many small businesses. This is why comparison websites like us exist, to make your life a great deal easier.
We offer a quick and free comparison tool that allows you to compare between the best electricity suppliers suited to your small business. You won’t have to waste time that should have been put towards running your business.
How to switch suppliers?
- Double check that you are not tied into any existing contracts
- Ensure you have paid everything in your existing contract
- Allow for a notice period
- Thoroughly read and agree to a quote and contract terms with your new supplier
- Give your new supplier your latest accurate meter reading
Small vs Micro businesses
Small Businesses are classified as those with 10 to 49 employees. They are eligible for small business electricity rates given by energy providers.
Micro Businesses have 1 to 9 employees and typically use less than 100,000 kWh of electricity per year. Additionally, Micro Businesses also receive more protection from energy providers:
- Providers must inform you of the key terms of contracts before you agree to it
- Providers must send you contracts and terms within 10 days, including renewal conditions for fixed rate plans
- Providers must include the contract end date if you are on a fixed rate plan
5 Things To Remember About Getting Cheap Small Business Electricity
- Always read and understand your supplier’s various rates and tariff options
- Utilise comparison sites to receive fast quotes and find the best supplier
- Find out how much energy you use per year
- Understand your business profile
- Know the terms of your contract