While many of the power companies blame the wholesale electricity market for increases in retail prices, the average unit cost for UK businesses have remained relatively flat.
Variations across the country could account for a 20% difference. Research shows regional pricing mainly affects those in outlying areas with Wales having the highest charges. East and West Midlands with Scotland have some of the lowest tariffs per kWh.
The table below shows averages for the common types of businesses in the UK.
|Business Size||Average Usage||Price/ kWh||Total Bill|
|Micro Business||7,500 kWh||14.76p||£1,213|
|Small Business||20,000 kWh||14.28p||£2,958|
|Medium Business||35,000 kWh||14.04p||£5,013|
|Large Business||90,000 kWh||13.75p||£12,470|
Prices may vary according to your meter type and geographic location.
Source: BusinessEnergy.com 2018.
These results are for standard meters with a profile class of 03 or 04. So-called max demand meters with a class of 05 to 08 usually see standing charges rise to as much as 70p per day with the same unit cost per kWh.
The graphic below shows average bills by each electricity supplier for business users based in the UK.
Usage and other government initiatives have effectively increased average bills by 100% or more over the past seven years. Current averages across all sectors are as follows:
With average bills continuing to rise perhaps it's time to check you're not paying too much? Renewal letters are posted to micro businesses after Ofgem changed their regulations, but this process doesn't apply for larger organisations. The onus is, therefore, on the contract owner to ensure they're on the right tariff.
All businesses also have the option to generate their own power and sell the excess back to the National Grid via Feed-in Tariffs (FIT). The FIT can be used to offset charges from overall usage.
There are over 100,000 traditional half hourly meters that take readings every half hour as well as those customers using max-demand meters under the P272 legislation. All require a lengthy tendering process rather than using instant pricing methodologies.
Lower climate change levies, investments in alternative fuel sources and new power stations should at least maintain the status quo. Increased economic activity leads to higher demand, which if this outstrips supply could undermine the dynamics of the market.
Fixing a contract for a longer term protects end customers from the volatile nature of the market. All small business electricity customers can opt for one to five-year fixed rate contracts from most suppliers.
New controls are unlikely to be put in place, although the regulator will improve the transparency for the end users. Other European countries and the USA have similar market issues and pay far higher rates.
Average usage is forecast to continue to rise with the continued increase in adopting new technologies by companies. Managing consumption is an area that can also reduce costs.
There are various ways to both monitor and cut consumption, such as the following:
Research shows that 10%-20% reductions in consumption can be achieved just by introducing these fundamental measures.