Business Gas and Electricity Prices

If you run a business, it’s always worth checking if your gas and electricity bills are too high and whether there’s money to be saved by switching to a new energy provider.

Similarly, new businesses usually find it’s more cost-effective to find a bespoke deal for their utilities, rather than stick with the potentially pricey deemed-rates tariffs they’ll inherit by default.

In our guide to commercial energy prices, you’ll learn how much you should be paying for your business gas and electric, how you can save money on your utility bills and how the right business energy broker can help you find the best bespoke rates and deals around.

Plus in our FAQ section, we answer the questions we hear most often about business energy costs.

What is the price of gas and electricity for a business?

Business gas and electric prices are calculated on a case-by-case basis. Your commercial energy provider will put you on a bespoke plan based on several factors, including the type of business you operate, its energy consumption and the postcode it’s based in. They will typically bill you monthly or quarterly, charging your company per unit (kWh) of fuel, plus most tariffs come with a daily standing charge.

To find out whether cheaper gas and electricity is available to your business, get in touch with us. We offer a free broker-matching service and can introduce you to the right commercial energy advisor for your company’s needs and circumstances.

Your energy broker will carry out a free business health check to find out whether money can be saved on your fuel bills. If there’s a better deal out there, they’ll track it down for you, so you won’t have to lift a finger.

Business electricity bills explained

The exact price a UK business will pay for its gas and electricity bills is based on the following…

• The size of your company: Your ‘buying power’ can vary depending on whether you run a large company, a small and medium-sized enterprise (SME) or a micro business
• The industry you operate in: This is likely to determine the amount of energy your firm consumes and the time of day it uses it the most. Energy used evenings and weekends is usually charged at a lower rate due to their being less demand on the network
• Annual energy consumption: Using more energy can mean a lower price but keep in mind that the daily standing charge can increase when unit rates decrease. Be sure to take note of the overall annual cost, rather than just the price of individual units
• The company’s postcode: Fuel prices can vary depending on which part of the country you’re based in. This is primarily based on how far the energy needs to travel around the network before reaching your business. The closer you are to energy plants, the cheaper it will usually cost, with more remote areas usually having higher rates.
• Contract type: Dual fuel tariffs for combined gas and electric can come with lower rates for both, though this isn’t always the case. Contract length is also a factor, as unit rates generally rise and standing charges fall for every year you add to your deal

Other factors that can impact the cost to a lesser extent, include your company’s credit rating (bad credit can mean higher rates), how the business trades (limited company, sole trader etc) and the type of meter you have (NHH, HH, NDM, Daily Meter, AMR/Smart Meter etc).

Given that gas and electricity prices for business customers can fluctuate dramatically based on your company’s circumstances and the variables listed above, the best way to keep costs low is to speak to a commercial energy broker before you delve into the market.

Are there any additional charges?

As we mentioned earlier, most business gas and electricity tariffs come with a daily standing charge. This can vary depending on the fuel type, as well as the size of the company. The VAT cost will also be added to your energy bill as all companies in the UK are liable to pay this.

What is the standing charge on business gas and electricity?

It varies from business to business, but for electricity in the UK, the typical daily standing would be between 26p and 30p for a micro business, and 24p to 26p for an SME.

For gas, between 23p and 26p is average for a micro business while SMEs can expect to pay anywhere between 18p and 22p for their daily standing charge.

There are business gas and electricity suppliers that offer deals with no standing charge. These agreements usually have significantly higher unit prices per kWh and can be unsuitable for companies with high energy consumption. You’d only pay for energy when you use it.

How much VAT will I pay?

VAT on gas and electricity for business use is charged at 20%, unless your firm qualifies for a reduction, works out of a mixed-use premises or its energy consumption is below the ‘de minimis’ level.

Business types that qualify for a reduction include charities, non-profit organisations and businesses that are used as dwelling or residential accommodation (excluding hospitals, prisons and similar institutions). Those which qualify for the discount would usually pay 5% VAT.

Meanwhile, companies that work out of mixed-use premises can qualify for the same discount if at least 60% of the floorspace is for dwelling or residential accommodation.

And finally, if your business uses less than 1000kWh of electricity and 4397kWh of gas per month, this would be below the ‘de minimis’ level, qualifying you for VAT at 5%.

What is the average cost of energy for a business?

In the previous sections we discussed the factors that will shape your bespoke quote for business gas and electricity, but below you can find tables to illustrate the average cost of business energy based on typical annual usage and the size of your company. Keep in mind that most deals also include a daily standing charge.

Average cost of energy for a micro business

If your company employs fewer than 10 staff and has a turnover under £2 million, it will likely be classed as a micro business.

The table below provides a rough example of the kind of monthly and annual costs you can expect to pay for gas and electricity.

Energy Type	Average Yearly Consumption	Average Monthly Cost	Average Yearly Cost
Electricity	5,000-15,000 kWh	£54 – £150	£650 – £1,800
Gas	5,000-15,000 kWh	£25 – £58	£300 – £700

Average cost of energy for a small business

If your firm employs fewer than 50 staff and has a turnover under £10 million, it will likely be classed as a small business.

The table below provides a rough example of the kind of monthly and annual costs you can expect to pay for gas and electricity.

Energy Type	Average Yearly Consumption	Average Monthly Cost	Average Yearly Cost
Electricity	15,000-25,000 kWh	£158 – £241.70	£1,900 – £2,900
Gas	15,000-25,000 kWh	£66 – £116.70	£800 – £1,400

Average cost of energy a medium-sized business

If your company employs fewer than 250 staff and has a turnover under £50 million, it will likely be classed as a medium business.

The table below provides a rough example of the kind of monthly and annual costs you can expect to pay for gas and electricity.

Energy Type	Average Yearly Consumption	Average Monthly Cost	Average Yearly Cost
Electricity	25,000-50,000 kWh	£275 – £816.70	£5,000 – £10,000
Gas	25,000-50,000 kWh	£125 – £266.70	£1,500 – £3,000

The tables above were created for example purposes and are accurate up to November 2020. For bespoke, up-to-date quotes for your business, speak to a commercial energy broker

Average business energy prices per kWh unit

For a rough idea of how much businesses typically pay per unit of gas and electricity, energy providers usually charge a micro business between 13p and 13.5p for a kWh of electricity, a small business would be charged between 11.8p and 13p, and a medium business 11.3-13p.

Average gas prices per kWh units are between 4.1p and 4.5p for a micro business, 3.8-4p for a small business and 3.5-3.7p for a medium-sized operation.

Who are the cheapest gas and electricity suppliers in the UK?

The cheapest gas and electricity supplier for your business won’t necessarily be the same one for the company next door. In other words, the commercial energy provider who is best positioned to offer the cheapest rates and tariffs will vary from one customer to the next.

Every commercial energy supplier has a different criteria customers must meet, and the closer you fit it, the more likely you are to end up with the most favourable deal on the market.

Some energy suppliers specialise in micro business and understand their needs better than their competitors, while others are better positioned when it comes to offering bespoke deals to firms with bad credit.

Whatever your company’s circumstances, the only way to find the commercial energy plan that fits best is to search the entire market for the optimum provider.

This would take a lot of legwork, not to mention in-depth knowledge of the market, but help is at hand. A commercial energy broker can do all of the hard work for you. The ones we work with have access to the entire market and will track down the best deal that you qualify for.

They will carry out a free business health check for you to establish where there’s money to be saved, and if switching to a new supplier is in your best interest, they’ll guide you through the process.

We offer a free broker matching service which will pair you up with an advisor who has specialist knowledge and in-depth experience working with businesses exactly like yours.

Tips for finding the cheapest gas and electricity tariff

The best way to find the most favourable business gas and electricity rates on the market is to use the right energy broker. They know the market inside out and can track down the best deal without you having to lift a finger.

Here are some other tips to help you land a good deal…

• Check whether your deal includes maintenance and care: Some suppliers bundle care plans for your commercial gas system with your contract. Find out how much extra you’re paying for this and ask yourself whether you really need it.
• Combined plans can be cheaper: For many businesses, taking out a dual fuel deal that includes gas and electric is more cost effective than separate bills. There may, however, be exceptions to this so talk to an expert about your company’s needs.
• Be wary of deemed rates: If you’re on a fixed-term contract, when you reach the end of your initial rates period your supplier might roll you over to a deemed rates deal. These are often more expensive, so consider shopping around before this point. Ending up on deemed rates is also common when you move into new premises. Be sure to look into whether there’s money to be saved by finding a bespoke energy deal.

Finally, it’s worth pointing out that ‘cheap’ doesn’t necessarily mean ‘best’. The company offering the least expensive fuel might be unsuitable for your business. But if you use a commercial energy broker, you can rest assured that you’ll be paired with the right supplier in terms of cost-effectiveness, quality of service and more.

How to compare commercial gas and electricity suppliers

Any comparison of commercial utility suppliers is only worthwhile if it spans the entire market. Only then can you be sure you’re found the best business gas and electricity prices available.

People often use business electricity price graphs, comparison websites and other online tools to compare gas and electric tariffs, but this isn’t always the best way to approach the market.

Price graphic information is not bespoke to your business and comparison sites rarely cover the whole of the market, and often give prominent placement to sponsored products, too.

A better way to compare tariffs, rates and prices for commercial gas and electricity is to use our free broker-matching service. We can introduce you to a business energy advisor with the right expertise to handle your enquiry.

They will carry out a full, whole-of-market comparison and track down the best deals that your company qualifies for. Your broker will fully explain the difference between each deal and give you bespoke advice about which one to choose.

After a full comparison has been carried out, it might transpire that the gas and electricity contract you’re already on is the best one around. This would be flagged up during your free, no-obligation business health check and your broker will offer full disclosure on this.

Get a quote for business gas and electricity from an expert

Finding the best business gas and electricity suppliers for your company can be difficult if you don’t have in-depth knowledge of the market, but the right commercial energy broker will know exactly which suppliers are best positioned to offer the most favourable rates to you.

We offer a free-broker matching service and can pair you with a business energy advisor who knows which providers will offer favourable tariffs to a company just like yours.

They will find you the most suitable energy quotes based on your firm’s gas and electricity needs, its circumstances and budget. Since the market is so vast, having a broker search it on your behalf will save you a lot of legwork and ensure you end up with the best deal.

Call 0808 189 0463 or make an enquiry and we’ll match you with your perfect commercial energy broker today.