A Brief Guide To Business Energy

Energy can be a large expense for any business but in order to get the best possible deal, it is vital to have a good understanding of it and how it differs from other types of energy, mainly residential energy. 

The difference between residential and business energy

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Whilst changing your residential energy tariff is a relatively simple and straightforward process, the same cannot be said for when it comes to changing business energy tariffs. This is because the types of contract available are very different. What you will notice is that:

  • Business tariffs cost less – with business energy tariffs the energy is purchased by the providers in bulk, rather than on a monthly basis with residential energy. Because of this it means that businesses benefit from a cheaper individual unit rate. However, because of this, it does mean that there is a cost associated with ending a business energy contract early. 
  • No period for cooling off – the typical residential energy contract takes no longer than 17 days for it to be complete. The cooling period comprises 14 of these days and allows a residence to cancel their contract at any time without being subject to some sort of penalty for doing so. With business energy tariffs there is no period for cooling off, which is why it is important for businesses to ensure that they are happy with the provider that they choose to go with.
  • Contracts last longer – whilst the usual variable and fixed energy tariffs are available, each and every business energy contract is taken out over a pre specified amount of time. This can be as short as one year or as long as five years. There is no opportunity to change this once a business is locked into a business energy contract – that is until they enter into something that is called a renewal window. This opens up a few months from the end.

The types of business energy contracts

Business energy providers offer a wide range of different contracts and so it is good to have an understanding of how all these differ from one another.

  • Deemed rate – this is the tariff that a business is placed on once it comes to the end of its current contract. This is an expensive tariff and so businesses should do what they can in order to avoid this situation. 
  • 28 day – this is the contract that businesses may find themselves on if they have never switched providers since the market for energy was deregulated.
  • Variable rate – this is where the individual unit rate for energy is linked directly to market activity. As a result, the price that a business pays can go both up and down throughout the entirety of the contract.

In order to get the best energy rate for your business it is beneficial to use a comparison website such as Utility Bidder. By doing this a business can secure the best possible tariff that will work to keep costs as low as possible.

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