How to Compare Business Energy Tariffs
Comparing business energy tariffs can help your organisation manage running costs and find a contract that suits the way it uses electricity and gas. However, business energy deals can be less straightforward than household tariffs: prices and terms depend on factors such as your location, consumption, meter type and contract length.
Looking beyond the headline unit rate is essential. Standing charges, contract terms and what happens when a deal ends can all affect the total cost.
What is a business energy tariff?
A business energy tariff is the pricing arrangement a supplier offers for electricity, gas or both. It normally includes:
- Unit rate: the price charged for each unit of energy used, usually shown in pence per kilowatt-hour (kWh).
- Standing charge: a daily charge for supplying energy to your premises, regardless of how much you use.
- Contract terms: details such as the contract length, payment method and what happens at the end of the agreement.
Some quotes may also show taxes or levies separately. Check whether the figures include VAT and any applicable Climate Change Levy (CCL), so you can compare like with like.
Types of business energy tariff
Fixed-rate tariffs
A fixed-rate tariff keeps the unit rate and, in some cases, the standing charge at an agreed level for a set term. It can make budgeting easier, but it does not necessarily mean your total bill will stay the same: your costs will still depend on how much energy you use and on the contract’s other charges and terms.
Variable-rate tariffs
A variable-rate tariff can change during the contract, subject to the supplier’s terms. It may offer flexibility, but costs can be less predictable. Check how and when the supplier can change the rates and how it will notify you.
Deemed and out-of-contract rates
If a business moves into premises and uses energy without agreeing a contract, it may be placed on a deemed tariff. A business that stays with its supplier after a fixed contract ends may move onto an out-of-contract rate, depending on the terms. These rates can be costly, so check your arrangements before moving in or reaching the end of a deal.
What to compare when getting quotes
Your annual energy use
Suppliers use your expected consumption to calculate a quote. Use recent bills or meter readings to estimate your annual electricity and gas usage in kWh. If the estimate is inaccurate, the tariff may not be the best fit for your actual needs.
Unit rates and standing charges
A low unit rate may be offset by a higher standing charge, particularly for a site with low usage. Compare the estimated annual cost as well as each individual charge. Make sure the quote uses the same consumption figures and pricing basis as the alternatives.
Contract length and end date
Business contracts can vary in length. A longer deal may provide greater price certainty, while a shorter one may give you the opportunity to review your options sooner. Check the start date, end date, renewal process and any notice period that applies.
Exit fees and contract conditions
Read the terms carefully before accepting an offer. Look for early termination charges, restrictions on changing supplier and requirements for giving notice. Ask the supplier to explain any condition you do not understand and get important details in writing.
Payment terms and billing
Check whether the quote assumes payment by direct debit, on receipt of an invoice or by another method. Consider billing frequency, meter-reading arrangements and any fees that may apply if payment is late or a bill is based on estimated readings.
Renewable electricity and additional services
If renewable electricity is important to your business, ask what the supplier’s claim means and what evidence or certificates support it. Compare any additional services, such as smart-meter support or account tools, and make sure you understand whether they carry extra charges.
How to compare business energy tariffs
- Gather your information. Find a recent bill, your meter details, site address and annual energy use.
- Check your current contract. Note its end date, notice requirements and any exit fees before exploring a switch.
- Request comparable quotes. Give each supplier the same usage information and ask for a breakdown of unit rates, standing charges and other costs.
- Compare estimated annual costs. Check what is included in each figure, including VAT and applicable levies.
- Review the terms. Look at the contract length, payment conditions, renewal process and charges that could apply.
- Confirm the offer in writing. Before agreeing, make sure the written contract matches the quote and that you know when supply will begin.
Using an energy broker or comparison service
A broker or comparison service may help you obtain quotes from several suppliers. Before using one, ask which suppliers it searches and whether it receives commission or another fee. Find out whether any commission is included in the price and whether you can see the underlying rates.
Do not feel pressured to accept an offer during a call. Ask for the full terms in writing, verify the broker’s identity and check that you are authorised to agree a contract for the business.
When should a business compare tariffs?
Start reviewing your options well before your current contract ends. The time you can arrange a new deal may depend on your contract terms and supplier processes, so check the relevant dates rather than assuming you can switch at any time. It is also worth reviewing energy arrangements when moving premises, adding a site or making a significant change to your business’s energy use.
Frequently asked questions
Are business energy tariffs the same as household tariffs?
No. Business energy contracts are usually arranged separately from domestic tariffs and may have different pricing, contract terms and switching processes. Business customers should check the specific terms that apply to their organisation.
Can a business switch energy supplier?
Often, but the timing and process depend on the current contract, the type of premises and the supplier’s requirements. Check for notice periods, end dates and any exit charges before starting a switch.
Is the cheapest unit rate always the best deal?
No. A tariff with a lower unit rate could have a higher standing charge or less favourable terms. Compare the estimated total cost using accurate usage figures, and consider whether the contract suits your business’s needs.
Are business energy quotes shown with VAT included?
Not always. Quotes may show prices excluding VAT or applicable levies. Ask the supplier what is included and compare all offers on the same basis. The tax treatment can depend on the circumstances and type of use, so check the details for your business.
Make an informed comparison
The best business energy tariff is not necessarily the one with the lowest headline rate. Compare unit rates, standing charges, estimated annual costs and contract terms together. With accurate usage information and a clear understanding of the conditions, you can make a more informed choice for your business.
Energy prices and contract conditions can change. Always check the latest written offer and seek independent advice if you are unsure about a contract or its tax treatment.
Comparing Business Energy Tariffs: Frequently Asked Questions
- How do I compare business energy tariffs?
- What should I look for when comparing business energy quotes?
- Are business energy tariffs different from domestic tariffs?
- Can I switch business energy supplier before my contract ends?
- How can I find out when my business energy contract expires?
- Is a lower unit rate always the cheapest business energy deal?
- Do business energy quotes include VAT and the Climate Change Levy?
How do I compare business energy tariffs?
To compare business energy tariffs, gather your latest bills or meter readings and note your annual electricity and gas use. Get quotes using the same usage figures, then compare the unit rates, standing charges and estimated total cost, checking whether VAT and any other charges are included. Review contract length, payment terms, renewal conditions and any exit fees too, as the lowest headline rate may not be the best overall deal.
What should I look for when comparing business energy quotes?
When comparing business energy quotes, look beyond the unit rate and check the standing charge, as both affect your total bill. Use accurate energy-consumption figures to compare estimated annual costs on a like-for-like basis, and check whether prices include VAT and any applicable Climate Change Levy. Also review the contract length, payment terms, renewal arrangements, notice periods and any exit fees to make sure the deal suits your business.
Are business energy tariffs different from domestic tariffs?
Yes. Business energy tariffs are designed for commercial premises and are usually offered under separate contracts from domestic tariffs. They can have different pricing, contract lengths, standing charges and renewal or exit terms, and business customers may not have the same protections as household customers. VAT and other charges can also be treated differently depending on the business and how energy is used, so compare the full costs and contract conditions rather than relying on the unit rate alone.
Can I switch business energy supplier before my contract ends?
You may be able to switch business energy supplier before your contract ends, but it depends on your contract terms. Some agreements allow an early switch, while others charge an exit fee or require you to give notice within a specified period. Check your contract’s end date, notice requirements and any early termination charges before arranging a switch, and ask your supplier to confirm the details in writing.
How can I find out when my business energy contract expires?
To find out when your business energy contract expires, check your latest bill, contract documents or supplier’s online account for the contract end date. If you can’t find it, contact your supplier and ask them to confirm the date and any notice period or renewal window. It’s worth checking well in advance, as the terms may affect when you can compare tariffs or switch supplier.
Is a lower unit rate always the cheapest business energy deal?
No. A lower unit rate can be offset by a higher daily standing charge, which may make the tariff more expensive overall, particularly if your business uses relatively little energy. Compare the estimated annual cost using your actual consumption, and check contract length, payment terms and any additional charges before choosing a deal.
Do business energy quotes include VAT and the Climate Change Levy?
Not always. Business energy quotes may show prices excluding VAT and the Climate Change Levy (CCL), so check the quote and ask the supplier what is included before comparing tariffs. The amount payable can depend on your business and how the energy is used, and some organisations may qualify for reduced rates or relief. Compare all quotes on the same basis, including any applicable taxes and levies.