How to switch your business energy (gas & electricity) tariff
Whether you’re just thinking about setting up your own business or whether you want to get a better idea of what is really going on with your company’s energy tariff, this is the page for you. Despite it being the same end product, gas and electricity for businesses is rather different to the energy we have in our homes. The difference comes in how we pay for it. There are a variety of rates available and depending on the size of the business there is a change regarding MPAN and the meter(s). If you do not know about MPAN, MPRN or MSN, then see our simple guide to learn what it all means.
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Businesses are all different and hence have different energy needs. As such, there have been a number of tariff types devised in order to cater to a number of business customers. Prices for business energy can vary greatly depending on a number of factors such as:
- Type of business
- Credit rating
These variables will limit and enable who provide energy for your company. Some companies may not provide a tariff that is suitable for the size or location (for example) of your company and therefore will not serve you.
According to business energy specialists ‘Make It Cheaper’, gas and electricity prices per kWh can be roughly bracketed to show how much you are paying in relation to the norm. They bracketed it as such:
Top band - 25p per kWh
Average - 15p per kWh
Low band - 10p per kWh
Over 5p per kWh - You should shop around
Types of Tariff
This type of contract is also known as an ‘assumptive renewal’ or an ‘evergreen’ contract. This basically means that your contract will have an auto-renewal element. These types of contracts can often at first seem to be cheaper or more efficient; however, it does require a certain sense of being ‘on the ball’. If your contract, for example is for 12 months, at the end of that year you will be given a small window (perhaps 1-2 weeks) to cancel or else it will automatically start your contract over again.
This type of contract refers to the fixed duration of the tariff. This will often be indicated by an amount of years. The unit rate price will be set on each individual tariff or negotiated with the energy company.
This is the type of contract that is commonplace amongst those companies who have no switched since privatisation in 1990. It very rarely provides the best prices; however, it does allow the business to change suppliers after 28 days.
This type of contract usually relates to those businesses that have just moved into new premises as a type of halfway house. Like the 28-day contract, businesses on a deemed contract can cancel after 28 days and should not really use this contract type as a long term option due to inflated prices.
Types of Meter
Single rate meter
This type of meter is the closest thing to the meters that we have in our homes. It measures your business’s energy usage on one flat rate 24 hours a day. This is a great option for businesses that primarily operate within peak hours (8am-10pm).
Two rate meter
This is the same concept as the household ‘Economy 7’ meter that some people have in their homes. It will charge your business based on two separate unit rates based on time of usage. This will generally be split between peak and off-peak hours. This would be a great option for those businesses that operate between midnight and 8am such as takeaways and late night bars.
Three rate meter
Similar to the two rate meter, the three rate meter has multiple unit rate readings: on-peak; off-peak; and weekends. This would be the best option for a business that regularly operates on weekends such as pubs and restaurants.
Half hourly meter
This type of meter is catered towards extremely high energy consumers. It measures your energy usage every half an hour to ensure that you are not overpaying on your energy bills. The correlation between half hourly meters and unit rates would generally say that it is a little cheaper; however, this is more due to the energy company wanting to secure the custom of such large consumers.
In a number of aspects, the way in which you pay for your energy as business will vary depending on the size of your company. There are 4 main categories in which you could be categorised: micro business; small business; medium business; and large business. In energy circles this is defined by your consumption. So you may make millions in turnover but use a miniscule amount of energy and therefore would be categorised in the micro or small business consumers section. As a rough guide, you can use the following estimates to define your company’s consumption bracket (figures based on per year consumption):
- Micro business: 5,000 kWh - 15,000 kWh
- Small business: 15,001 kWh - 30,000 kWh
- Medium business: 30,001 kWh - 100,000 kWh
- Large business: 100,001+ kWh
Depending on size, your business will also have a different Meter Point Administration Number (MPAN). These are categorised as so:
- Micro business: 03, 04
- Small business: 03, 04
- Medium business: 03, 04, 05, 06, 07, 08
- Large business: 05, 06, 07, 08, 00
Switching Energy Supplier/Tariff
Switching energy tariff for your business is a little trickier than finding a household tariff. However, that doesn’t mean that it has to be overly complicated. One of the main differences is that suppliers will not uniformly display their across-the-board tariffs as standard like with residential energy. This is mainly due to the above variables; the majority of companies, size dependent of course, will have to discuss a mutually beneficial tailored tariff, meaning the tradition price comparison method we are used to isn’t really applicable a large portion of cases.
Usually, energy suppliers like to actually speak to someone regarding your energy contracts, meaning you will likely need to give the energy supplier of your choice a quick call after you’ve done your general research. The time taken to complete the switch can vary greatly. This is dependent on your current supplier, who may insist a notice period. Some suppliers are also quicker and more efficient in switching circumstances as well.
Technically you current energy supplier could object to your switch; however, only in certain specific circumstances such as:
- If you are in debt with your supplier.
- If you are in a fixed term contract that has not yet ended.
They can not object, however, if:
- You are not signed to a fixed term contract such as a deemed contract.
- If your fixed contract term has come to an end and you are no longer bound.