How to compare small business tariffs
Energy makes up a significant chunk of the daily operating costs for many small businesses, so it makes sense to get the best business energy prices you can. Here’s how to compare business energy tariffs and work out the best energy deal for your business growth.
How do small business tariffs work?
In the same way you might shop around online for the best energy deal for your home, you can get a range of small business energy quotes for your business; and usually manage your small business energy account online too.
A couple of factors make business energy a little more complex than domestic or household tariffs though. For a start, there are different tariffs for different-sized businesses. At EDF, we define a small business as one that are uses less than 100MWh electricity and up to 300MWh of gas. And we have a separate team who look after large businesses: EDF Business Solutions.
Business energy contracts can also be longer than domestic deals. For instance, EDF offers fixed-price contracts up to three years. This can be a big advantage if you want to fix your rates in case business energy prices go up in the future.
Small business tariff types
Business energy contracts are usually one of four types:
Fixed-rate tariff: The standing charge and unit rate are fixed for the duration of the contract. This is an excellent choice for small businesses that want the security of predictable charges.
Variable-rate tariff: The unit rate is linked to the underlying energy market, so it can go up or down during your contract. It can also be harder to predict and calculate what you’ll pay.
Time-of-use tariff: These offer cheaper rates for electricity used during off-peak hours. They may offer savings for firms that can shift their energy use away from times of high demand.
Zero (or no) standing charge tariff: With these tariffs, there’s no standing charge, so you only pay for the gas and electricity you use. The unit rate can be higher though, so they’re typically best suited for small businesses with little or sporadic energy use.
Not sure which one is right for you? Read more in our blog on Choosing the right energy tariff for your small business.
What makes up my small business energy invoice?
As with household energy invoices, small business energy rates are composed of two parts:
- The unit rate
- The standing charge
Much of the focus is on the unit rate, which sets the price a business pays for each unit of electricity or gas. This is usually an amount per kilowatt hour (kWh), so the amount you pay goes up or down, depending on how much energy you use.
There’s a second important part to small business tariffs: the standing charge. This is a daily fee that covers the fixed costs of being connected to the gas or electricity networks. This remains the same regardless of how much energy you use, so it can make up a large proportion of the energy invoices for a small firm with modest power demands. It’s possible to get business energy tariffs with no standing charge, but these typically have much higher unit rates.
Read more about standing charges, why they vary, and what’s best for your business
One further thing to consider is that it costs more to supply energy in some regions of the country than in others. As a result, standing charges and unit rates can vary depending on where your business is based.
How do you compare small business tariffs?
To get the most competitive quotes, first you need to know how much energy your business uses – ideally over a year so you can see any seasonal fluctuations. This can be tricky for new businesses or those moving premises, but you can get the best idea from looking at past invoices.
It’s also a good idea to work out what kind of small business tariff you might want (see Choosing the right small business tariff). For example, during times of instability for your business, it may be wise to focus on fixed-price quotes. While companies that can shift their energy usage might want to investigate time-of-use quotes. Think about how long you might want your energy contract(s) to last, too.
Next, have a shop around to get a few quotes. There are small business energy brokers who can compare energy costs for you, but remember: EDF always guarantees its cheapest prices direct, online.
When comparing small business energy quotes, it’s important to make sure you’re comparing like-for-like, particularly if you’re weighing up fixed-rate quotes against variable ones. Think about what might happen if your energy use goes up or down significantly. For example: if there’s a particularly cold winter, or you expand the business, or if you're about to invest in more efficient equipment.
Did you know? Small energy efficiency measures could add up to bigger savings on your energy bills. For instance, you could save up to 15% of the energy your business uses, just by having the right lighting? Discover more energy efficiency ideas in our Nine tips to help you cut your small business energy bill blog.
While cost is important – and for many small businesses it will be the most significant factor for growth– don’t forget to consider other things too. Remember: you may be committing to a business energy supplier for several years, particularly if you take out a longer term fixed-rate tariff, so you should consider their reputation for customer service, how easy it is to manage your account and the stability of the provider.
At EDF, we have a dedicated team of small business energy specialists, which is just one of the reasons why we’re rated Excellent by our customers on Trustpilot. Customers also love our easy-to-use online account management system, as they can take care of their energy anywhere, anytime.
Of course, an increasing number of businesses are thinking about their environmental impact too – and buying low carbon energy is an essential way to lower your business’ emissions. Did you know that at EDF, we’re Britain’s biggest generator of zero carbon electricity[1]?
Your handy checklist: comparing different energy tariffs
Use this checklist to work out which energy tariff is right for your small business:
- Type of tariff: fixed, variable, zero standing charge or time of use?
- Access to tariff: go direct or through a broker?
- Choice of supplier: How reliable are they? What’s their customer service rating on Trustpilot?
- Sustainability: Do they offer low-carbon energy or any energy-saving features?
- Account management: Can you manage your account easily online?
Comparing small business energy suppliers: where does EDF rank
see source information here
What discounts are available for small business energy?
At the height of the energy crisis, small businesses could benefit from the Energy Bill Relief Scheme and, later, the Energy Bill Discount Scheme. These reduced the unit rates paid by businesses if wholesale energy costs went above a certain level. Both schemes have now ended, however, and there are currently no small business energy grants available to help with energy costs. Remember too: the Ofgem price cap also only applies to home energy customers.
This means it’s even more important to compare gas and electric business tariffs carefully when you’re choosing your small business energy provider. And don’t forget to consider the whole quote – comparing unit rates and standing charges – to get an accurate idea of how much you’ll be paying for your energy.
If you need more help making a choice, hear from our Director of Small Business, Jon Perks, on why more than 260,000 small business customers have chosen EDF for their energy. Or why not spend 60 seconds finding the best business energy quote for you?
