Choosing the right energy tariff for your small business
As a small business owner, it's important you choose the best energy tariffs for your business, as they can significantly impact your costs and help you to grow.
An energy tariff is the contract you sign with your supplier which includes the prices you pay for each unit of electricity or gas, and a daily set fee called standing charge. Energy tariff prices can change based on factors like when you use energy, the energy source, your supplier, and your location. Some tariffs have unit rate prices which stay the same for the duration of your tariff. While others vary depending on usage, time of day or the energy wholesale market prices. It's crucial for your growth to pick the one that best suits your business.
What is a fixed contract?
A fixed tariff is an energy plan where the price you pay per unit of energy remains the same for a set period, usually one to three years. The rate is agreed upon at the start and does not change during the contract term.
What are the benefits of a Fixed tariff?
Predictable costs: a fixed tariff means you’ll always know exactly how much you’re paying for energy units each month. This helps you manage your cash flow more effectively, as you won’t have to worry about sudden price hikes. Since your energy rate remains the same throughout the contract, you can plan your expenses with confidence, making it easier to stick to your budget. Plus, knowing your expenses can help you reduce your energy consumption, giving you the chance to grow, save even more on overall costs and take greater control of your finances.
Protection against price increase: since your rate stays the same, you won’t be affected by higher market prices. This shields you from unexpected cost increases, allowing you to keep your energy expenses predictable and under control. With energy prices often fluctuating, this stability is a huge advantage for small businesses, helping you avoid higher bills and giving you peace of mind.
Long-term savings: if energy prices go up, you could potentially save money compared to those on variable tariffs, depending on when you sign up for your fixed plan.
Do EDF offer a discount on our fixed contracts?
By choosing our online fixed tariff, you can often benefit from a cheaper price than Deemed or variable tariffs. We also offer discounts up to 7% on tariffs if you agree to a direct debit in your fixed tariff, as this is the quickest and easiest way to pay.
Don’t forget you’ll get our cheapest prices direct.
What is a variable contract?
A variable contract is a pricing plan where the cost of your electricity or gas can change over time, based on the current market rate and factors like supply and demand. This means your energy bills can go up or down depending on market changes.
What are the pros and cons of a variable tariff?
Variable tariffs offer several benefits, including flexibility, as they often come with no exit fees, allowing you to switch to another tariff or provider at any time. They also provide the potential for cost savings since rates typically decrease if wholesale energy prices drop.
However, these tariffs come with the risk that if energy prices rise, both the unit rate and standing charge will increase, leading to higher bills. Their fluctuating nature makes budgeting and expense management more challenging, and the lack of price stability can be concerning during times of market instability.
Do EDF offer variable contracts?
Given the current market conditions, EDF does not offer variable contracts, as the potential for rising prices could negatively impact customers.
When a customer’s fixed tariff ends, they may be moved to the Freedom tariff temporarily, which could result in higher prices if market conditions change. To prevent this, it is recommended that they arrange a new fixed deal before their current contract expires.
Similarly, a deemed tariff applies when a customer has not actively agreed to a fixed-term contract, such as moving into a new property without arranging an energy deal. In these cases, the customer is placed on a deemed tariff, which is often charged at a higher rate across suppliers to help cover the risk of non-payment until the customer selects a formal contract.
What is a zero standing charge tariff?
A zero standing charge tariff is an energy plan where you don’t pay a daily fixed fee. Instead, you only pay for the energy you use. This type of tariff can be useful for businesses with very low or irregular energy consumption, such as seasonal operations or premises that are not used every day.
What are the pros and cons of a zero standing charge tariff?
A zero standing charge tariff can be appealing for businesses that use very little energy or operate irregularly, as you only pay for the energy you consume. This can make it a cost-effective option for seasonal businesses or premises that aren’t used every day, since you won’t incur charges during periods of low or no activity.
However, these tariffs often come with higher unit rates, which can make them more expensive for businesses with consistent or higher energy usage. They’re also not widely available across suppliers, meaning your choice of tariffs may be limited and you may miss out on more competitive fixed-rate deals.
Each supplier will have different terms and conditions, so it’s important to check these carefully. As Robyn explains in the video below, zero standing charge tariffs work differently from standard plans, so make sure you calculate the unit rate against your actual consumption. This helps you understand whether paying no daily fee genuinely saves you money or if a tariff with a standing charge would be more cost-effective for your business.
If you're still unsure about the best tariff for you, it's a good idea to give one of our team members a call at 0333 188 6725, and we'll help you find the best. You can also get a quote and compare our best energy deals for gas and electricity!
