Find your perfect business tariff - understanding the size of your business and your electricity and gas prices
When it comes to energy for businesses, one size doesn’t fit all. Here’s how business energy types, contracts and charges all work, to help you get the best deal you can.
Build your business energy profile
1. Size matters - what size business are you?
We broadly split our businesses into three types: Small (or ‘SME’- small to medium-sized enterprises), Medium and Large. The size your business is depends on your technical metering consumption/info and electricity profile class (metering classification). It’s very easy to find out what your profile class is. All you have to do is look at the first two digits of your Meter Point Administration Number (MPAN), as this corresponds to your profile class.
- A small business - usually falls under the profile class of 03 or 04. You’ll likely have one or two meters, use less than 500,000kWh a year and have fewer than 50 sites. Generally, high street shops and businesses, small offices, bed and breakfasts, most catering (pubs, bars, etc.) and small farms will fall into the category of ‘Small Business'.
- A medium business - will have over 50 sites and use more than 500,000 kWh a year. A medium business could be a large hotel chain, shop chain, or distributor for example.
- Large business - think national and international brands (for example Tesco, Nissan and Coca Cola). They can also be large public services such as Network Rail. These companies will spend into the millions on their energy, have the capacity for onsite generation and storage as well as large fleets of vehicles.
Still not sure? Don’t worry. Start your quote and we'll identify your meter and business type to help you find the best business energy tariff. We'll either give you a quote online or if we need any extra details we'll ask you to give us a call. If you have an energy broker they can also help determine what kind of business type best fits.
2. Know your business energy contract
The size, location and metering of your business will determine the kind of contracts and services available to you, with offers varying between business energy suppliers.
It makes sense to understand the types of contracts there are so you can check you’re getting the best deal for your business use. Remember that once you’ve agreed to a business energy contract, you can’t exit it early without paying fees, so it’s important to make sure you find the right one. Here’s a summary of the types available:
- Fixed - Here you’ll agree to a set rate per unit of energy (measured in kWh) for the fixed term of your contract. This doesn’t fix your total bill, which will go up or down depending on how much energy you use. Fixed tariff rates are usually cheaper than our variable tariff, helping you save more on your energy. Check out our fixed deals.
- Variable - This is a bit like a tracker mortgage, where the rate charged per unit of energy (measured in kWh) is linked to market activity. This means your rate per unit of energy could change during your contract but you do get the freedom to switch or upgrade at any time.
- Extended tariff - This type of tariff lets you extend the length of your current contract with the same supplier. This could be a good option if you think you’re getting a decent deal.
- Deemed and out-of-contract - If you haven’t agreed an energy deal with your supplier then you’ll be on what’s called a ‘deemed’ contract. This tends to happen if you move into a new business site. You might also find yourself on a deemed or out-of-contract contract if your fixed term has ended but your supplier is still supplying energy to you. Deemed and out-of-contract setups are usually more expensive. It's best to compare prices and agree on a contract as soon as you can to avoid paying more than you need to.
- Rollover - This normally applies if you’ve not agreed a different deal before your current contract end date and there are no renewal agreements in place.
3. Know your business energy use and carbon footprint
It’s a no-brainer to say that the more energy you use the more you pay. It, therefore, pays to be as energy efficient as possible. To do that you need to understand when and where you use (and waste) energy the most.
Many companies run regular energy audits so they can easily spot where and when they can save on their energy and reinvest it elsewhere. This is particularly useful for any small business looking to free up cash flow and save money. Find out how to check office energy use and get your employees involved in energy savings.
Using less energy is vital for the good of the planet if we want to cut carbon emissions for good. So do get to know how big your carbon footprint is. Do you use gas, oil or diesel? Do you use energy efficient equipment such as LED lighting or smart heating and cooling? Do you currently drive or manage petrol and diesel vehicles? All of these impact your carbon emissions and will have financial consequences as we move towards achieving Net Zero in the UK.
4. Know your business energy bill
Business energy bills tend to be much more detailed than domestic energy bills. The following factors make up the total amount you pay:
The standing charge on your business gas and electricity bill is the amount you pay each month to cover the cost of physically supplying energy to your premises, and keeping it connected to the energy network.
Wholesale energy costs
This is what your supplier pays to buy your gas and electricity from wholesale suppliers. Energy suppliers buy energy in advance of you using it, based on your predicted use.
This is the amount of profit the energy supplier makes from your contract.
Transmission use of system (TNUoS)
These are network costs incurred to ensure that the transmission and distribution network is maintained and operated.
Distribution use of system (DUoS)
These costs are levied by the Distribution Network Operators (DNO), which are companies that are licensed to distribute electricity.
Value Added Tax (VAT) on business energy is usually charged at 20%. Residential customers, in comparison, pay VAT at 5%.
However, some businesses will be eligible to pay 5% VAT on business energy. Your business will be eligible for this if you use less than what is known as the ‘de minimis’ threshold. The threshold is 33kWh or less of electricity per day, and 145kWh or less of gas per day.
These charges are used to pay subsidies to operators of renewable energy plants.
Climate Change Levy
This is an environmental tax collected by the government. It is intended to encourage businesses to become more energy efficient.