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Electricity Prices for Small and Micro Businesses

The economic downturn of the last few years has made it critical to cut utility costs. Power supplies are one mission critical expense where proactive management can reduce costs.

Instant online quotes are available from all main suppliers to find new deals on electricity. Undertaking a comparison is easy using our unique tools rather than having to search yourself.

If you locate an alternative supplier, then the switching process today is seamless and straightforward. Switching contracts to make savings on bills takes minutes rather than hours. Each year thousands of small and micro businesses realise these benefits.

State of the SME Market

Current market research data is as follows:

  • 1,759,000 active meters consuming 39 TWh of power
  • Average annual electricity consumption 22,172 kWh

Source: Cornwall Energy Market Reports

What are the Pricing Trends?

Over the past seven years, the unit cost per kWh has doubled. The increase is mainly due to wholesale pricing changes, although other costs have also increased. Additional servicing and transmission charges incurred are passed directly onto the end user. The graphic below highlights the history of these changes since 2013:

Graph showing small business electricity unit costs and standing charges from 2013 to 2017

Source: BusinessEnergy.com - This financial data excludes VAT at the current rate.

Where Can I Find the Market Leading Rates?

All "Big Six" suppliers provide similar tariff structures to the SME market but vary greatly for larger companies. More competitive rates can be found by some of the larger broker services or by going direct. Comparing all contracts available helps discover potentially cheaper plans not always available from these industry players.

Regional Variances

Prices vary throughout the UK by region, so it's difficult to compare similar properties in London, Manchester or Leeds.

Using an average consumption of 25,000 units (kWh) a year, the difference between the lowest rates is over £500. The cheapest region is the North East of England with the most expensive prices located in the Scottish Highlands.

The regional differences noted above are due to higher transmission costs the 14 regional electricity boards charge for distribution across the National Grid.

Recent Pricing Quotes

Below are 17 recent quotes the broker team provided for a range of SME type meters. The chart highlights the average price obtained.

Business electricity prices per kWh

Source: BusinessEnergy.com

Why should I Consider Switching Supplier?

Switching supplier or contract is one of the easiest methods to reduce your overall costs.

There's limited loyalty in the energy industry with new customers receiving the lowest tariffs. The switching process is undertaken automatically by your new provider in the same manner as residential services.

New Customers Always Get the Best Terms

Much like in the insurance industry, new commercial gas and electricity customers receive the most favourable terms. Therefore, it's imperative companies check available market tariffs towards the end of their contract expiry date.

If you have a contract that's more than one-year-old, then savings are almost guaranteed. Legacy rates are increased annually beyond typical inflationary increases.

Even if you're proactive in managing your supply, you should continue to test the market to ensure you're on a competitive agreement.

How Are Prices Calculated?

Each supplier has a rate book matrix covering tens of thousands of individual prices. It's unlikely that two adjacent buildings have the same unit and standing charge. The factors that influence these charges include:

  • Your meter type and profile number.
  • The region of the country that you're based.
  • What your peak demand usage threshold is.
  • The length of your agreement in years.
  • The payment method of your monthly invoice.
  • Your company's credit rating and score.
  • Your annual consumption data.

Additional discounts are provided for dual fuel contracts, paying by monthly direct debit with some companies providing a small loyalty bonus.

You Can Stay With Your Existing Supplier and Still Make Savings

You're still able to switch your gas and electricity supply with improved terms over your renewal offer letter from your current supplier. Either contact them directly, use a comparison service or a broker to find current tariffs. You'll move to your new rates once your current agreement has finished.

Why Use Our Services?

A large number of variables in the supply chain presents some extremely complex pricing structures. There are over 16,000 matrix variables offered which restrict the ease of analysing one company against another.

Poorly negotiated contracts often result in overall charges being as much as four times higher than an identical business.

Fortunately, some of the complexity can be by-passed by using helpful online services such as the price checker at www.businesselectricityprices.org.uk to compare rates.

Their online calculator makes it easy to compare prices. It shows how much a business is paying for its electricity compared to other businesses with the same postcode. Tariffs in the UK range from as little as 7p/unit (kWh) to a massive 32p/unit if you're out of contract.

Managing the Renewal Cycle Effectively

Small and micro business switching and renewal cycle

Businesses are tied into a contract with their supplier for the until it finishes, so it's essential to know the current state of your contract terms. Renewal windows can open anywhere from 120 days to one week before the contract ends. Then the enforcement of automatic extensions takes place.

Ensure You Know When to Renew

Knowing in advance when your renewal window opens is critical. You can set up reminders for your end dates in addition to using standard termination letters that guarantee your right to switch.

Such letters are also available on the Internet with examples posted on our site here. If you're not sure when your current contract ends, you can find out from your supplier by sending them a contract checking enquiry.

High consumption users may benefit from bulk prices, basket pricing, group buying and general tendering.

Proactively Check Available Prices

There are three basic methods to get current rates:

  • Ask your current supplier for a quote. Their offer will likely be uncompetitive.
  • Visit each supplier's website to get quotes, although not all have online pricing tools.
  • Use a broker to search the whole market and present all available options to you.

Your "Meter Point Reference Number" on your bill is your starting point for change. The first two digits are a classification related to the meter's consumption. Most UK meters have a 03 or 04 profile indicating average stable consumption.

Larger companies have half hourly or 00 meters and require a specialist service.

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