Do you know how much electricity your business is using? Have you noticed a spike in your energy bills? Can you tell when your energy use is at its highest? These are questions businesses must answer if they want to save on energy expenditures.
Most businesses pay the market price for electricity. The market price for electricity will depend on the amount of use, peak demand and the time of day or week your business uses it if you have an interval meter. You can manage your energy costs by taking note of the different options when it comes to energy suppliers.
What to Expect in Terms of Cost
UK businesses currently enjoy the lowest energy prices in Western Europe, according to the UK government. Nevertheless, energy bills will continue to rise with or without government intervention.
Businesses and households in the UK have the benefit of changing energy suppliers if and when they see fit, subject to contract. This is why it’s essential to keep yourself up-to-date on tariff changes. Most energy suppliers these days are more than happy to give you a quote online or over the phone; just make sure to have your recent energy bill ready so you can get a fairly accurate quote based on your actual consumption.
You’ll likely receive a fixed price for a fixed term as this is how most business energy prices are calculated. Depending on what is happening with wholesale prices, it can be difficult to decide how long you would like to stay with your energy supplier. If you have doubts, settle for a one-year contract although most service providers will offer three-year contracts at a fixed price.
Some tariffs come with a standing charge while others have a split tariff where the initial units are charged at a higher rate. Whether or not a standing charge applies to you will depend on the amount of electric consumption you have per month.
You should also consider opting for green energy. Although green energy tariffs are a little higher than standard ones, your business will be exempt from the Climate Change levy that is imposed on businesses.
Unit Prices for Energy
Wholesale prices for electricity tend to fluctuate. Retail prices tend to be set at twice the wholesale price. Over the past 12 months small to medium enterprises (SM’s) have had to pay rates ranging from 8p to 11p plus VAT per kWh. Take note when considering suppliers that even if you are offered a lower unit price, you might still end up with the same monthly bill as that for a higher-priced supplier because of standing charges.
Small businesses using between 15,000 and 25,000 kWh a year can expect to pay an average of 9.27 p/kWh with a standing charge of 22.75p a day. Larger businesses can expect discounted rates from suppliers because of their higher energy consumption.
Gas unit prices are lower and on average cost between 2.7p/kWh to 2.9p/kWh but do come with higher standing charges at an average of 70p a day. Lower prices are available to businesses consuming 100,000kWh per year or more.
Finding the Best Supplier
There are many options available for your business when it comes to energy suppliers. Most of them should be able to give you a fairly accurate quote based on your current energy bills. Make sure to also consider the supplier’s reputation and customer service when you make your decision.
Let Approved Index help you find a Business Energy provider for you.