A business electricity tariff is an independent form of energy contract typically designed for personal business use. While most business electricity is usually supplied through the same wires as domestic electricity and, in many cases, from the same suppliers, there are some key differences between commercial electricity and domestic electricity, such as: unit price per unit (CPP): This is the amount you pay per unit for the electricity used. You can also find this same information in line with your annual billing. Typical tariffs include single unit purchase, multi-unit purchase, tariffs with a minimum and maximum age and usage requirements, and contracts lasting for the entire year.
What business electricity tariffs are available?
The tariffs are set out by a range of different organizations – government agencies, oil and gas companies, building societies, voluntary firms, local authorities and retailers. They differ across sectors and industries to take into account the unique needs of their businesses. There are several types of tariffs available and they are designed to provide a competitive advantage to businesses. In the UK, most businesses pay the same rates across the board but some areas of the country have varying tariffs for businesses within certain sectors, such as the construction industry. Similarly, those businesses that work in different countries around the world pay different rates depending on the country in which they work.
There are three main tariffs for business electricity – the usual meters for domestic customers and the standing charge. The standing charge is sometimes called the ‘one way’ meter because it only measures consumption and does not record energy use in its records. As well as being used to calculate the amount of your bill, it also determines the rate at which your supplier will fix the meter. For example, if you request a standing charge when your energy usage is higher than a certain amount, the supplier will fix your meter at a higher rate. If you request a reduction in the standing charge, the supplier may reduce the meter’s fixed rate.
An energy deal is usually agreed between suppliers and users. To protect their interests, both sides need to make the best deals. An energy deal will set a minimum amount of energy that must be used by consumers or users, as well as other rules, terms and conditions. An energy deal may offer incentive payments to clients who use less electricity while also reducing their costs. This can potentially save money, particularly if there are other changes that can be made to improve the efficiency of British businesses.
What costs make up your business electricity prices?
Another type of tariff for business electricity is the standard unit rate or the SMR. This is the rate at which electricity is sold from the supplier to the end user. It differs from the national unit charge because it is often determined by the size of the business and the level of its energy consumption. The standard SMR is applied to larger businesses or sectors of greater production than other small businesses or sectors. For instance, a business that sells one million pounds worth of goods per annum will pay more for its electricity than a company that sells five million pounds but uses only half that amount of power.
Other tariffs include the complex rate of return tariffs, which are usually calculated on a monthly basis. These tariffs are often determined by how energy efficient a particular unit is and how much the supplier thinks it could save them in the future. A larger number of suppliers will offer better rates for larger businesses or sectors. These rates are often used by public sector companies and bodies such as local authorities. The tariffs and energy efficiency ratings are also taken into account when setting your business electricity prices so make sure you find the right tariff for you.