There can be a massive difference in energy contracts depending upon the type of user you are. It can become quite an ordeal to decide on the best contract for you if you’re not aware of the technicalities behind energy contracts. Our goal in this article is to answer the query ‘Is business energy cheaper than domestic energy? And assist you to understand how energy contracts are different for different energy users.
Is business energy cheaper than domestic energy?
If you look into average rates per unit then the answer is clear that business energy rate per unit is far lower than domestic energy and it is also observed that almost all other characteristics are also the same for large and small businesses. But various factors need to be considered:
- The VAT on domestic energy is far lower than business energy. You will have to only 5% if you are a domestic user while businesses have to pay 20% VAT.
- Businesses are charged with Climate Change Levy or CCL. The current rate for CCL is 0.541 per kWh for energy and you will be charged 0.188 per kWh for gas.
Collectively both these charges might increase the rate of business energy in comparison with domestic energy, so it’s vital that you don't only focus on the per-unit rate often mentioned in headlines.
However, there are also certain cases of VAT and CCL that can mark a difference.
- Any renewable energy you use is not charged with CCL
- If you have an average of less than 33 kWh electricity consumption and 145 kWh of gas then you will not be charges with CCL and only 5% VAT
- You do not have to pay CCL and are only charged 5% VAT similar to domestic users if there is a residential element in your business. For instance, you own a B&B or campsite or have a caring home business.
There are many levels on which the prices differentiate for domestic and business consumers. The first major difference comes with the daily changing prices for business customers based on the market. Domestic energy tariffs are usually only changed annually. This affects the decision of the type of business energy contracts the consumer avails of. Many businesses prefer fixed-rate contracts over variable price contracts to make budgeting more convenient or prevent the effects of any exceptional increase in prices of gas and electricity.
This sudden changes in the business energy tariffs for business energy can make organizing the energy for the business quite difficult as the previous quotes you might have received will expire with changes in energy tariffs
It is recommended to customers to move quickly with the quotes as delay can cause you to lose the good deal you were getting before the changes in prices. Per unit prices for business, energy is considered to be lower in comparison with domestic energy. The reason for that is the business energy is sold in higher volumes to business due to their high consumption as compared to energy consumption by domestic users.
There are also custom rates offered to businesses depending upon the needs of the business. The facility of custom rates is not available to domestic users and also the consumers of a region are charged with the same rate.
Predicting business energy consumption
It is more difficult for suppliers to predict the consumption of a business in comparison to the consumption of the domestic user. Time of day of energy usage for business is different while it is easy to predict the total consumption of a house with the help of a similar pattern of usage in a day. This is also one of the reasons for different contracts for both types of users and as their usage pattern is very different from each other. However, suppliers are now introduced with "Half Hourly Metering" to accurately monitor the consumption of their customers. This makes making future contracts quite convenient as suppliers have accurate data of energy consumption of their customers
Cooling off periods
Domestic energy suppliers offer a cooling-off period to their customers. This facility is not offered to business customers by the supplier and they must make sure that they understand every condition of the contract before entering the contract to avoid any issues in the future.
It is quite evident that making a comparison between energy tariffs to get the best one is not an easy task especially if you do not have enough knowledge. However, our team of experts at Online Energy Business is glad to help you and walk you through the complete procedure and focus points of online business energy comparison. Our team will help you get the best deal for your business energy through real-time business energy comparison To make a comparison now and get a quote to avail of our services, please get in touch with our team at info@onlineenergybusiness.co.uk. We’d love to hear from you!
Contract length
There is also some major difference in the length of the contracts of business energy and domestic energy. Mostly, domestic energy users are offered energy contracts between the time of 12 and 24 months. However, the contract term for business energy is much longer and goes up to more than 36 months. It is even more difficult to cancel the contract earlier for business energy as they are charged much higher by the supplier for getting out the contract before the due period. While domestic customers are also charged for early cancellation of the contract but the fine is much lower as compared to the business energy customer.
Domestic users have the facility to frequently roll over a month after month after the duration of their contract is ended. However, business energy contracts are charged with "Out of Contract" rates until the renewal of contracts or switching of contracts. This increases the business energy rates immensely as the "Out of contracts" rates are much higher than rates of contracted energy.
Hopefully, now you would have a clear idea about the price differences of domestic and business energy and other factors important in energy pricing.
HOW TO SWITCH BUSINESS ENERGY SUPPLIER
Now with a great number of options from energy suppliers, it can be difficult to choose the perfect one for you. There are more than 50 energy suppliers in the UK now and due to their competition, they frequently introduce certain offers on energy tariffs.
Switching to a new business energy provider may help you reduce the overall costs. It will help you save some money for spending in other departments of your business. However, having so many options can also make taking decisions difficult. In this article, we will help you understand how you can choose the best energy supplier for your business.
Why Switch Business Energy Suppliers?
It is always better to decide about switching your supplier near the end of the current contract. There are chances that you can get lower rates from other suppliers. There are chances that after your current contract ends, your suppliers increase the rates and you get higher energy bills.
It is recommended to start looking for other suppliers who fit your requirements, as soon as the period in which you are allowed to switch starts. Energy switching can not only get you cheaper energy but you might also get better service. If you are facing problems with the services with an existing supplier then it is time to start looking for other suppliers who might provide better services
When Is The Best Time To Switch?
More considerations need to be taken into account in switching your business energy supplier as compared to changing your domestic energy supplier. The size of your business, the energy consumption, type of contract, and contract lengths are the factors that play a vital role when it comes to business energy switching.
Renewal Dates & Switching Windows
One of the major information you need to have about energy switching is knowing when you are allowed to switch energy suppliers. Get to know about the renewal window or notice period.
You can get this information from the energy bills you receive monthly. It would mention the period till which you can renew your contract. In the case of recent contracts, the renewal period might be years ahead. Usually, the suppliers offer a renewal period of 60-120 days before your existing contract ends. Some suppliers also offer a notice period as short as 30 days. You must be informed by the renewal window of the specific supplier you are in contract with so are not charged extra for canceling the contract out of termination time.
Switching Deemed Contracts
If you start working with the new suppliers then they might place you on a deemed contract. In this case, you are allowed to make a switch at any time without presenting any notice or being charged with extra charges. Similar rules are applied to customers who are paying "out of contract" rates to the supplier.
Moreover, now OFGEM requires customers to let their customers know about the type of tariff they are consuming currently and which contract they are placed on. They must ensure that each customer is well aware of the technicalities and know how to get the required information regarding that.
Comparing Prices
Once you know whether you are allowed to make a switch or not then you have to look for what better deals are present for you. This where our experts at Online Energy Business can help you decide and analyze the best option. We provide help figuring out the quotes on business energy and also other factors that you must look out for, for your business energy switch. Following are the two major points of focus:
- Unit Prices: This is the price you pay to the supplier per kWh and is in pence. The usual per kWh rates for electricity are 10-20 p/kwh and 3-6p/kWh for gas. If you are paying more than that, then you are on an expensive contract.
- Standing Charges: You are also charged with some fixed charges even your business is open or closed. The range of these charges is usually from 25p/day to £10/day as per the size of the business. Also, remember that you will be charged with different standing charges for gas and electricity.
How to Switch Business Energy Suppliers
To get the best deal and rates for your business energy, you must compare the tariffs for various suppliers and chose the one that fits your requirements. Due to the availability of various options, this step is time-consuming. To save your time it is recommended to use online energy comparison services. The online energy comparison facilities provide much faster service than the services offline energy brokers provide. Here at Online Energy Business we search for the best online business energy deals for you and help you chose the one that meets your requirements completely. All we need is some basic information like the postcode of your business, details for contact and information about the energy needs of your company. We will provide you the quote after a couple of minutes of getting this information.
Hopefully, this article will be helpful for you to understand the complete energy switching process. So contact our team at info@onlineenergybusiness.co.uk and use our online energy comparison service and compare business energy online! We hope with the help of our best online energy comparison you will be able to book the best deal for yourself.
Q: What is the best business to start within an electric field?
The field of electrical engineering has several practical implications in aerospace, construction, the oil and gas industries, and telecommunications. Also, its knowledge can be utilized in the chemical and defense industries. Following are the top business ideas to start within an electric field.
- Energy Efficiency And Green Consulting
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All these fields have a great scope within electric energy and any business started around these lines can be profitable and be a good source of income. Make sure that you gather enough information regarding the business you plan to start and plan your financing and other essentials beforehand so you do not have any problems in the future.
