Back to Basics – Business Electricity

We can all be guilty of thinking complicated equals better.

Complexity has crept into every single aspect of life. It seems like everything these days requires email registration, a constant stream of current location via satellite, two-factor authentication, cookies, wi-fi connectivity, your National Insurance number, the name of your third pet, proof of residence, a 14-character password…

Well, that’s the way it seems it least.

But often the simplest solutions are the best – the ones that everyone else overlooked in favour of complexity.

So, in this vein of thought – we at Energy Solutions decided to return back to basics in search of some simple solutions for our customers.

In this article we will hope to explain the basics of business electricity, setting out some foundational knowledge for our readers.

Business Electricity Prices

In this section, we’re going to explain how to conduct basic business energy comparisons and go over some key bits of information.

To do this we will work with an example business with an annual usage of 25,000 kWh who are looking for a one-year fixed contract. For comparing quotes, this company decides to head first to an online comparison website.

When comparing business electricity quotes, they will likely be presented in a similar fashion to below:

SupplierUnit Price (Pence per kWh)Standing Charge (Pence per day)
EDF Energy18.65p25p
SSE17.74p36p
Yu Energy19.28p29p
Scottish Power17.43p30p
Opus Energy18.89p34p

Figure 1. Table of example prices from britishbusinessenergy

When this business is comparing electricity rates, there are two main charges to pay attention to:

Unit Price: The unit price is the price that you will pay for each unit of consumption. As we are talking about electricity, in this scenario it will be pence per kWh (kilowatt hour). Basically, if your electricity consumption is low then costs attributed to unit price will be too – consume less pay less, consume more pay more.

Standing Charge: The standing charge is a fixed charge that must be paid daily simply for agreeing a contract with a supplier. In most cases these charges will be presented as pence per day. These costs will not change with consumption which makes them much easier to forecast correctly.

When comparing supplier realistically for most price will always be king. Electricity suppliers in the UK are generally on a pretty even footing when it comes to offering the cheapest business electricity, with a mix of small businesses and Big 6 suppliers taking the crown for various combinations of factors.

Some businesses with extreme budget concerns may plump for a contract with a little heavier standing charge for added certainty with forecasting. Some may prefer for a supplier that is easy to reach and provides good service for their customers.

When trying to differentiate between suppliers all offering the same product for very similar prices (which thanks to a competitive UK energy market, is often) it is worthwhile to set aside some time to go over what the biggest ‘must-haves’ for your business are.

Benchmark business electricity prices (per kWh)

When comparing business electricity quotes it is often difficult to say with any certainty whether or not you have found a good deal.

It may be the cheapest electricity quote available to you, but is it as cheap as your competitors?

For already profitable businesses – any energy savings can be seen as pure profit. If a competitor scores these savings while your business sticks with the same old rates, they gain a massive competitive advantage.

According to a publication from the UK government, Gas and Electricity Prices in the Non-domestic Sector, the average prices for business electricity by business size in 2021 Q1 are as follows:

Business SizeAverage Electricity Rate (p/kWh)
Very Small16.8 p/kWh
Small15.1 p/kWh
Small / Medium14.16 p/kWh
Medium13.1 p/kWh
Large13.08 p/kWh
Very Large12.24 p/kWh
Extra Large13.43 p/kWh
Average14.0 p/kWh

Figure 2. Table of average electricity price per kWh for business electricity in 2021, from gov.uk

As you can likely see from the table above, with increased operational scale comes a fall in unit price for electricity. Electricity suppliers are clearly much more willing to offer the best rates when a customer comes with huge estimates of annual consumption.  

Save on Business Electricity Prices – Pure Profit

If you’ve read the average rates above and feel your heart sinking as you realise you’ve been paying well over the odds for electricity, keep reading.

There are two easily taken steps that all businesses can take to secure a saving in annual business electricity costs, regardless of operational nature.

The first is to dig out a copy of your current electricity contract, hop on the internet and see what rates are available to your business. Within your current contract will be information on early exit fees and when these apply – it is advised to wait until these are no longer enforceable. However, if you are truly paying over the odds then it may be worth paying to get out of the contract early! Equal attention should be paid to both unit rate and any standing charges, as the latter can often be overlooked.

If you can get through the moderately difficult maths unscathed then you will be able to calculate the scale of any potential savings to be made by switching supplier.

The second step is to contact an energy procurement specialist! By adding a dedicated commercial utility specialist to your business can bring unbelievable value in several ways:

  • An expert energy consultant readily available if and when you need them.
  • Advice on the absolute best contract for your business electricity, saving you time and money.
  • Frees up time for you or other employees to step away from managing electricity and get back to what you’d rather be doing.
  • Bill validation services and expert understanding will catch when you are being overcharged, saving you money and hassle.

Get in contact with a specialist today to find out more!

Preparing for Savings – Essential Information

For those wanting to take either step above and start saving money on electricity costs, there should be a few things looked out before you take action. Finding these will take minutes, but it pays to be prepared.

  1. Know your annual consumption of electricity, or an educated estimate.
  2. Find out what times during the day your business demands the most electricity.
  3. Find and make a note of your MPAN number (Meter Point Administration Number).
  4. Find out and make a note of your profile and metering type.
  5. Find out when your electricity contract is up for renewal.

Bored of Basics? Try these out

We appreciate that for some readers of this article the subjects covered may be topics they are already knowledgeable of. If you feel that you fall into this category, or simply want to continue on a quest to become more knowledgeable about the UK energy industry you may be interested in the following articles:

  • Flexible Contracts: You have likely already encountered flexible contracts when searching for the cheapest business electricity. With these contracts there are additional terms and conditions which customers should be aware of. We explore flexible contracts in a little more detail in a two-part article here:
    https://www.energybrokers.co.uk/news/resources/a-brief-history-of-flexibility
  • Supplier Information: Many don’t take the time to look past business electricity rates when looking for a new business energy supplier. For those that do, we have created full energy supplier write-ups here:

Energy Solutions that work

At Energy Solutions, all of our energy goes on procuring yours.

We understand that unless your business is in energy procurement, there are other tasks you’d really rather focus on.

With over twenty years of experience in the industry, there is little our energy specialists haven’t encountered and overcome.

If you are interested in finding out a little more about how we can help your business, you can contact us in the following ways:

Telephone: 0131 610 1688

Email: nick@energybrokers.co.uk

WhatsApp: 07757 400 788

Webform: Click Here

We look forward to hearing from you!

For more information about this post and how Energy Solutions can help with your Electricity, Gas, or Water, click on the links, or check out the contact details at the bottom of the page.