What goes into your energy tariff: A simple guide for Small Businesses
Running a small business can sometimes feel like a bit of a balancing act, between managing costs, staying competitive and planning for growth. One area that often feels confusing, your small business energy tariff.
At EDF, transparency matters. We support Ofgem's call for clearer, fairer business electricity prices, so it's one less thing for you to worry about.
Let’s break down how your tariff is calculated, what influences it, and how you can make smart choices to save cash and carbon.
What makes up your business energy tariff?
There’s more to your business energy tariff than meets the eye, it’s made up of several components that reflect the cost of supplying power to your business.
1. Unit Rate (per kWh)
This is the price you pay for each unit of energy you use. It's influenced by:
- Wholesale energy prices (which fluctuate based on global markets)
- Your business’s energy usage patterns
- The type of tariff you choose (fixed, variable, time-of-use, etc.)
The unit rate is one of the biggest factors in business electricity rates, so it's worth comparing options carefully.
2. Standing Charge
This is a daily fixed fee that covers the cost of keeping your business connected to the energy network. It includes:
- Maintenance of infrastructure
- Meter readings
- Contributions to government schemes like environmental initiatives
Some small business tariffs offer zero standing charges, but they often come with higher unit rates - ideal for businesses with low or sporadic energy use.
3. Other Costs
Your invoice may also include:
- Network costs: Charges from the companies that own and operate the pipes and wires
- Environmental levies: Such as the Climate Change Levy (CCL)
- VAT: Typically charged at 20% for business energy, there are exemptions to this, check out our FAQ page for more information.
- Operating margin: This covers the supplier’s costs and profit
Understanding these elements helps you compare business energy suppliers more effectively.
Choosing the right tariff for your small business
Energy tariffs come in various forms. What will work best for you depends on how your business operates. Here are some of the main types:
Fixed rate: Price stays the same for the contract term
Variable rate: Price fluctuates with the market
Time-of-use: Cheaper rates during off-peak hours
Zero standing charge: Pay only for the kWh you use
When completing a business energy comparison, make sure to look at both the unit rate and standing charge. Don’t forget to factor in contract length, supplier reputation and sustainability options.
Why energy efficiency matters
Understanding your tariff is just the beginning. By improving your energy efficiency, you can reduce your usage, and your bills. Start with a simple energy audit to identify quick wins like:
- Upgrading lighting
- Managing heating and cooling smartly
- Engaging staff in energy-saving habits
Organisations like the Carbon Trust and the Energy Saving Trust estimate that small changes can help small businesses cut 10 - 20% from their energy bills. That's money you can reinvest into your business' growth, equipment or even small business solar solutions.
Your business energy invoice explained:
Your energy invoice shows:
- How much energy you’ve used
- The cost per unit
- The standing charge
- Any additional levies or taxes
- The tariff you are on
Understanding these elements helps you take control of your energy spend and spot opportunities to save. Check out this guide for more information.
Are you ready to take charge?
Whether you’re a café, retail shop or a growing office, understanding your tariff is the first step towards smarter energy use. If you’re unsure which tariff suits your business best, our team of sales specialists can help you compare business energy options and find the right fit for your small business.
If you don’t have a smart meter, make sure to regularly provide meter readings, this helps ensure you’re only paying for the energy you actually use.
Our sales team can be contacted via phone on 03331886725 or if you are a new customer check out our online quote tool here!
Let’s help power your business forward, efficiently, affordably and sustainably!
