Business energy vs domestic energy
Domestic and business energy tariffs aren't the same – although the unit measurements are identical, the actual plans themselves are very different in both cost and contract details.
And while changing suppliers for your home energy is relatively simple, comparing the best business gas suppliers and business electricity providers for your business can be more confusing and time consuming.
But the energy experts here at UKPower make the hard work easy and get you a great business energy deal in the process.
Is business energy cheaper than domestic energy?
Business energy rates are often cheaper than domestic energy rates, but most businesses will pay VAT at a rate of 20% on business gas and electricity, compared to the 5% rate paid by domestic energy customers.
If you run a charity or not-for-profit organisation you may qualify for a reduced VAT rate of 5%.
Similarly, your businesses will be able to pay a reduced rate of 5% if it uses less than 33 kilowatt hours of electricity or less than 145kw hours of gas per day. This is known as the 'de minimis' amount.
For more information, check out our guide to business energy bills.
How is business energy different from domestic energy?
Here are just some of the ways that business suppliers differ from domestic suppliers:
- Cheaper energy - Suppliers buy commercial energy in bulk to last throughout the duration of the contract, whereas home gas suppliers will buy it on a monthly basis. This means that the supplier gets business energy at a better rate, and passes this rate on to the commercial sector. Additional charges such as VAT and the Climate Change Levy can increase costs quite significantly, however.
- Longer contracts – Most businesses take out their energy contracts across a long period of time - often around 5 years. This means a few things. Firstly, the price they get given is better because the supplier can bulk buy the energy. On the other hand, though, it means that it’s almost impossible for a commercial customer to leave that contract early. They will have to wait until the cancellation period, which is usually 6 months before the contract end-date. And because of this, businesses won’t regularly be able to find better deals. Domestic gas suppliers, for example may only contract you for 12 months, three of which are cancellation windows.
- No dual fuel – Energy suppliers don’t offer dual fuel contracts for businesses. Commercial customers have to have seperate gas and electricity contracts, making securing deals that much more time consuming. This can be a bit of a headache, especially if each utility contract has a separate end date. This is where a company like UKPower can help take the pain away from power.
- No ‘off-the-shelf’ tariffs – Each business has different energy demands, and so suppliers don’t offer businesses the same off-the-shelf tariffs they offer domestic customers. Instead, they assess the needs of each business on a case-by-case basis and offer a bespoke quote accordingly. Whilst this is ideal because it suits your needs specifically, it also makes it difficult to know whether you’ve been offered the most competitive rates unless you compare energy plans with every supplier. Something that is really time consuming. Running the same process once with us allows you to find quick results, easily.
- No cooling-off period – Commercial energy deals don’t often come with a cooling-off period, so once you’ve signed a contract you’re tied in for the long haul. This is why, although it’s a pain, reading through the terms and conditions is always advisable.
How to switch business energy
You’ve probably noticed that switching suppliers for your business energy is a time-consuming and a huge effort. Which can be frustrating if it’s just one part of a much larger operation you have to manage. But changing suppliers and finding great deals is what we’re about. Our team of energy-savvy experts can make sure you’re on the absolute best deal on the market. Here’s what we do, in a nutshell:
- We talk - Talk to us about what you want help with - one, or both of your energy contracts.
- We search - Our experts search live data and prices from a whole multitude of suppliers to get the deal that is perfect for you.
- You save - When you’ve decided what you want to do, we’ll set up your new contract and leave you to get back to running your business. It’s as simple as simple as that.
There’s little stopping you running through your own quotes, but you’ll soon find it takes up a lot of time getting separate quotes for gas and electricity from each individual supplier. But a 10 minute call to our business energy experts means they can take care of the switch, and you can be sure you’re getting the best deal available. And we don’t charge you a penny for using our service.
Should you have a business energy when working from home?
If you are a sole trader and work from home, you’ll probably be classed as a microbusiness and may be eligible for a commercial energy deal. If so, Ofgem rules stipulate your contract will work differently to that of a larger business, and you’ll have more protections in place, such as a reduced notice period and the option of a cooling-off period, similar to those on domestic energy contracts.
What is a microbusiness?
A microbusiness is defined by the European Commission (EC) as a venture with fewer than 10 employees and a turnover or balance sheet total of less than €2 million. In order to qualify for a microbusiness energy contract though, the criteria is slightly different, and your business must use less than 200,000 kWh of gas or 55,000 kWh of electricity a year.
For more information, check out our energy for microbusinesses guide.
Are you eligible for a business energy contract in your home?
In order to meet the criteria for commercial energy tariff, you’ll not only need to prove you are running a business from home, but also that 50% or more of the energy you use is for business purposes.
This may sound a high proportion, but you’ll probably find that just using lighting, heating and electricity to run your office equipment takes you over this threshold, but remember to deduct any appliances that would be on regardless of your business being there, such as fridges.
If you need further advice on finding the best deal on your business’s energy contract, give us a call on 0800 326 5517. Or leave us a few details in the box at the top of the page and we’ll give you a call back.