Understand your energy profile to find your perfect Small Business tariff

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 possible.

Build your business energy profile

1. Size matters - what size business are you?

We broadly split our businesses into three types: micro, small and large. The size of your business 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.

• Micro business - employs fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than £2 million, uses no more than 100,000 kWh of electricity per year or uses no more than 293,000 kWh of gas per year.
• Small business - employs fewer than 50 employees and an annual turnover of £6.5 million or a balance sheet total of £5 million, has an annual electricity consumption level of not more than 200,000kWh or an annual gas consumption level of not more than 500,000 kWh.
• Large business - 50 or more employees and an annual turnover exceeding £6.5 million or a balance sheet total exceeding £5 million, uses an annual electricity consumption level of more than 200,000kWh or an annual gas consumption level of more than 500,000 kWh.

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 call us. If you have an energy broker, they can also help determine what kind of business type best fits. We also have a dedicated blog about this that you can find here.

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 ensure 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 to a different deal before your current contract end date and there are no renewal agreements in place.
• Time of use - TOU tariffs charge different rates for your usage depending on the time of day. Typically, electricity is more expensive during peak hours (when demand is at its highest) and cheaper during off-peak times (outside of 4pm – 7pm). While this might sound like a minor detail, it can have an impact on your monthly prices – especially if your business can shift energy use to lower cost periods.
• Zero Standing Charge - A zero standing charge tariff (ZSC) is designed to allow you to pay only for the energy you consume when you consume it. This tariff is ideal for many businesses including those who operate seasonally or may not be open 7 days a week. If your annual consumption is over 3,500 kWh for electricity and over 5,000Wh for gas, then you’ll be eligible for this tariff.

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 to 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 involve your employees 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. For industry specific tips on energy saving, just click here.

And remember, being carbon-conscious can be fun! Check out our Energy Saving Bingo Card blog on how to encourage energy saving habits with your colleagues!

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:

Standing charge
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.

Supplier margin
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.

VAT
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.

Renewables levies
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.

Click here to visit out dedicated blog all about understanding your small business statements, or watch the videos below:

Manage your business energy with us

Energy isn’t a fit-and-forget; it’s an ongoing journey, and we’re here to help you every step of the way.

We're one of the largest suppliers of energy to UK businesses, and we want to leave you reassured you’ve got the most competitive prices and access to our latest energy solutions to help you be more sustainable.

Compare our tariffs and get a quote in 60 seconds – our best prices are available online.

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