How do I find the cheapest energy rates for my business?

Keeping a careful eye on your energy bill is definitely a worthwhile endeavour. With fluctuating energy rates, inflated tariffs and automatic contract renewals, energy costs can easily creep up. However, comparing cheap business electricity rates and tariffs is often a little more complicated than comparing domestic rates.

There are far more business electricity plans out there than there are for home consumers. What’s right for you will depend on the type of business you run, where your operations are based and the size of your business. Additionally, unlike domestic customers, businesses don’t benefit from price caps. There are also different types of tariffs to consider, as well as different contract terms.

How do business energy rates work?

If you are searching the internet for business per kWh pricing, you might find that the prices listed seem a little high. Most energy suppliers don’t publish a full price for all of their tariffs. They do publish their deemed and out of contract rates.

Deemed rates occur when you have no active contract to supply your business with power. This is most likely to happen when you move into a new business premises. The energy supplier contracted by the previous tenants will assume that you would prefer to have an uninterrupted supply of power, so will continue the supply at a much higher rate, known as the ‘deemed rate’. This rate will continue until you sign a contract with them or switch to a new supplier.

Out of contract rates, or extended supply rates, are put in place when your existing contract with a supplier ends before a new one is put in place. Out of contract rates can also be enforced as a result of non-payment of energy bills. It’s uncommon to find yourself paying out of contract rates as your supplier should send you a renewal letter with plenty of notice before your contract ends.

Fixed rate vs variable rate tariffs

Business energy contracts are usually paid via a fixed or a variable tariff. The differences between the two are explained here.

Fixed rate tariff

This type of energy contract will guarantee you a fixed rate for a set period of time, regardless of market fluctuations. Typical contracts last between one and three years, although some suppliers offer them as long as five years. Fixed rate contracts tend to offer the best value for small businesses.

Variable rate tariff

The price you pay on a variable rate contract will depend on the wholesale price of electricity, which means that it can go up or down. This type of agreement will allow you to switch suppliers easily as you won’t be tied to a fixed term agreement. There is also risk involved should the energy prices increase in the future, but similarly you will also benefit from any price decreases.

How can I make sure I’m getting the best deal for my energy?

Now that you understand the different types of rates that energy companies offer businesses, how do you find the best one for your business?

Costs can vary greatly between energy companies, so it’s worth doing your homework. Get quotes from as many energy suppliers as you can for electricity gas and dual fuel. Dual fuel tariffs as not always cheaper, so it’s worth checking all three.

Don’t stop at kWh pricing
When checking your current tariff alongside your quotes, make sure that you are comparing the unit rate per kWh as well as the standing charge. A standing charge is a fixed amount that you pay on your energy tariff. Most energy suppliers charge for standing charges in pence per day. Some tariffs have low unit prices but high standing charges. Make sure that you are comparing the overall annual cost of your bill rather than individual rates.
Know your contract end dates
All business energy contracts require formal termination, so you’ll need to monitor the end dates and terminate it in time if you are looking at switching. Allowing contracts to roll over could result in you paying 75%-85% more depending on your provider.
Consider a longer-term contract
Once you are happy with your rates, consider a longer-term agreement if you believe prices will rise. The longest fixed-rate contracts are usually for five years. Longer term fixed rates will often be at a higher rate, but can also help with cashflow and budgeting.
Pay your bills by direct debit
Paying your bills by direct debit could save you between 2% and 5% depending on your provider.
Work with an energy broker
If trawling the market for the best energy deal from the best supplier on the best tariff seems a like it might be a little too time consuming, consider working with an energy broker. At Eneco Consulting, our energy consultants draw on their years of experience and curated industry contacts to acquire your best deals on water, electricity and gas. We also offer a wider consultancy service for commercial water and energy alongside a range of other related services.