The price of business energy per unit is a lot like domestic prices. The difference is that businesses pay a VAT of 20% while domestic customers pay a lower rate of 5%.
Wholesale market effect
The wholesale price of energy changes every week and sometimes daily. If your company can purchase energy from a generating company, you can expect a rate of 5p or 6p/kWh.
However, most small businesses purchase energy via retail organisations. As a fundamental principle, retail prices are twice the wholesale prices. Rates for SMEs vary from 13.2p to 16.7p with VAT for unit prices per kWh. Also, expect a standing charge on top of it. If your business has a lower unit rate but the daily charge is high, then your annual bill will be around average.
Typical prices by business type
|
BUSINESS TYPE |
KWH UNIT PRICE |
STANDING CHARGE |
COST PER YEAR |
|
Coffee Shop |
13.42p |
26.70p |
£2,109 |
|
Hair Salon |
13.88p |
27.23p |
£2,182 |
|
Small Farm |
14.19p |
24.21p |
£2,218 |
|
Dental Surgery |
13.84p |
27.61p |
£2,176 |
|
Restaurant |
14.87p |
25.46p |
£3,067 |
|
Newsagent |
14.51p |
24.28p |
£1,830 |
Source: https://www.businesselectricityprices.org.uk/cost-per-kwh
Average commercial kWh prices by business size
|
BUSINESS SIZE |
USAGE/ YEAR |
UNIT PRICE/ KWH |
STANDING CHARGE |
COST PER YEAR |
|
Micro Business |
8,000 kWh |
14.42p |
27.40p |
£1,254 |
|
Small Business |
20,000 kWh |
13.98p |
26.83p |
£2,894 |
|
Medium Business |
40,000 kWh |
13.79p |
26.41p |
£5,612 |
|
Large Business |
80,000 kWh |
13.24p |
26.20p |
£10,688 |
Source: https://www.businesselectricityprices.org.uk/cost-per-kwh
Based on these two tables, the daily standing charge increases as the unit price decreases, however, the total estimated invoice for one year is almost the same. The kWh also changes depending on the business type and the power company. Unit prices, as well as the standing charges, also depend on the length of the contract.
It will be best to compare your yearly bill than the absolute rates from the quotes that you receive. You may use your previous year’s consumption as a guide whenever you compare the prices of one supplier to another.
Most companies offer a 10% renewal discount. However, it is still best to compare prices with competitors. You may also find smaller and independent companies with lower rates and better customer service, but just before you sign a contract with them, make sure that you are aware of the latest available pricing for your business.
Switching suppliers
Before you switch suppliers, it is vital that you have completed your contract with your current supplier. Your supplier is required to inform you that your contract is about to end within 60 to 120 days. They must also provide you with at least 30 days to either switch tariffs or renew on a new rate.
If you feel like your renewal unit rates are much higher than your current one, then it is best to get in touch with a contractor like Utility Bidder. They will be able to provide you with the best deals in the market and can even negotiate a lower price with your existing provider. Call them to make sure that your business is well protected when it comes to energy.