12 month fixed
100% renewable electricity with a fixed price for 12 months
24 month fixed
100% renewable electricity with a fixed price for 24 months offering greater security for your business
Cheap overnight electricity, great for charging your electric vehicles for the lowest cost
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If you have been using the same business energy supplier for more than two years, chances are they have shifted you onto a higher tariff than the one you started with. In the business, so-called “acquisition rates” are set low to attract new customers.
Our partners Radius Energy use only 100% renewable sources to power their customer’s businesses. This means you can play your part in helping the country transition to a lower carbon future without compromising on either service or value.
The pricing structures for business energy and domestic energy are different. There’s a larger variety of business pricing structures available from UK energy suppliers than for domestic customers. The price you pay is affected by your geographic location, business type, the times of day you use most energy, your contract length, payment method and your company’s credit rating.
The unit price for business energy in many contracts is closer to the wholesale energy market. This means it is usually cheaper, but there are more price fluctuations. Business energy customers also have some additional levies added to their bill, such as the Climate Change Levy (CCL). By contrast, domestic energy bills are much more predictable. Unit prices are fixed for at least a year in advance, and remain stable, but they do tend to be higher than business rates.
The charges on business energy bills are itemised, and can be confusing if you are not used to them.
Your total is likely to begin with wholesale energy costs, which fluctuate. Then there will be business-specific levies. These are the Transmission Use of System (TNUoS) charge, the Distribution Use of System (DUoS) charge and the Climate Change Levy (CCL). You can read more on these below. After this there will be metering costs, VAT on gas and electricity, and your supplier’s profit margin.
The wholesale cost of energy is the price your provider pays to buy your gas and electricity from wholesale suppliers. Energy providers buy the energy in advance, as a way of guaranteeing the supply and stabilising the price to a certain extent. This is why you are locked into your contract for a certain period.
Transmission Use of System charges are the costs of transporting and distributing energy. For domestic customers these are embedded in the unit price, but for businesses they are itemised separately. They include the cost of maintaining and upgrading the national grid. They will vary depending on the location of your business, because different zones place different levels of demand on the network.
Distribution Use of System (DUoS) costs are applied by the licensed companies that distribute electricity in the UK. Your charges vary depending on whether you are using energy in the day or the night, and on the maximum supply requirements of sites that make up the network.
The UK government provides a number of environmental tax and relief schemes, encouraging businesses to operate in a more environmentally-friendly way. The Climate Change Levy is one of them. It is an environmental tax charged on the energy that businesses use. It’s designed to encourage businesses to be more energy efficient, which reduces their carbon footprint and emissions.
The CCL applies to businesses in the industrial, public services, commercial and agricultural sectors. Some companies are exempt from paying the CCL, depending on the amount of renewable energy they use, although nuclear power - despite having no direct impact on carbon emissions - is subject to the charge. Charities which do not have any commercial activities are exempt from paying CCL, as are businesses that consume very small amounts of energy.
You have to pay the Climate Change Levy at either the main rate or carbon price support (CPS) rate, depending on the type of company. The rate you pay will be on your fuel bill.
Green gas is biomethane. It is created through anaerobic digestion by bacteria, which is a sustainable process. Humans and animals will always produce waste after digestion, and biomethane is part of this waste captured for heating purposes.
Current green gas processes uses farm, food and landfill waste. By choosing to heat your business premises with it, you can significantly lower your carbon footprint.
Biomass can generate electricity in several different ways. The most common is ‘direct combustion’, which means burning agricultural waste or wood to heat water. This produces steam, which spins turbines. In some biomass generating plants, the extra steam can also be used in on-site manufacturing processes, or for heating, which makes the whole process even more energy efficient. There are also other ways to generate electricity using biomass.
Metering costs are the expense of making and installing your meter and, if it’s not a smart meter, having it read manually. The price of the actual meter is spread out over a very long time period in small payments.
VAT on electricity and gas bills for businesses is usually charged at a rate of 20%. This differs from the VAT on energy bills for domestic customers, where VAT on gas and VAT on electricity are both charged at 5%.
Some businesses will be able to pay a reduced rate of 5% VAT on energy bills if they use less than what is known as the ‘de minimis’ threshold. The de minimis business electricity VAT rate is 33 kilowatt hours (kWh) or less of electricity per day, while the de minimis rate for VAT on gas is 145kWh or less of gas per day.
You can also get the VAT discount if at least 60% of your business’s energy is used for domestic purposes, or if you are a charitable or non-profit organisation.
The supplier margin on your bill covers the costs of your energy supplier. This will include their employees’ salaries, their marketing costs, their taxes and so on, and of course some net profit.
If you go on a green business energy tariff or contract, this means that some or all of the electricity you use is matched with the amount the supplier buys from renewable energy generators.
You still get electricity through the same wires as if you were on a standard tariff. You just have a contract that makes sure your money is being spent on supplying electricity from renewable sources into the national supply. The renewable energy you use could come from wind farms, solar farms, hydroelectric power stations and biomass plants.
Notice we said “some or all”. This means not all green energy is fully renewable. Check the small print to make sure you are not paying extra for no real reason. There is a legal requirement for energy suppliers to publish details of their fuel mix, breaking down what percentage of the electricity they generate comes from renewable sources and what percentage comes from traditional sources such as coal and gas, and what comes from nuclear power.
If you’ve recently moved into a new office, shop or other type of business premises, you may be getting your energy from the supplier that provided energy to the previous tenant. When this happens, you are not given the discounted rates for new customers, called ‘acquisition rates’. Instead you will be paying higher ‘deemed’ rates. The reason for the higher prices is that the energy provider is taking on a financial risk. They do not know your credit history, what your business does or much else about you.
The short answer is no, you should never automatically accept energy from the supplier to the previous tenant.
No, there usually is no cooling off period for business energy contracts. As the UK regulator Ofgem explains:
‘Most business deals do not offer a cooling off period (this is the option of cancelling a contract within a certain amount of days after it is agreed). This includes when you have agreed to the contract over the telephone. So be sure that you are fully happy with all the terms and conditions before you agree to it.’
The prices you are likely to be offered in a quote for business energy are generally discounted for new customers. In the business they are called “acquisition rates” as they are set attractively low for the purpose of acquiring new customers.
After you have been a customer for a while, you are switched onto a higher rate and the price of your energy goes up. This means that switching suppliers, and getting onto the “acquisition rate” of a different company, will almost always save you money.
If your initial electricity or gas contract has recently expired, but you didn’t arrange a new contract, your supplier will have automatically put you on “standard” rates. These are also known as “out of contract” rates. They tend to be more expensive than contractual rates.
If you phone the company, they normally offer you the opportunity to switch to a better deal. You may get an even better price by switching to a new provider.