Business Knowledge Hub

Business energy FAQ

Our comprehensive FAQ covers everything that you need to know when shopping around for your business energy solutions.

What’s the difference between domestic and business energy tariffs?

The main difference between domestic and business energy, is that business energy services are far more bespoke. People living in residential buildings broadly require similar kinds of services, but businesses have a diverse range of needs.

Costs are likely to be higher for business energy tariffs, it’s not as easy to switch suppliers, and you’ll also discover that you’ll need to manage your tariffs for gas and electricity separately.

What contracts are available for business energy?

Here is a look at the common types of contracts on offer for business energy services. These contracts are flexible and can often be adjusted depending on the needs of the individual business.

  • Fixed contract: A fixed contract stipulates a fixed fee that will be charged for business energy services for the length of the contract. This is particularly popular among smaller businesses that require the security of knowing how much they are likely to be charged for a set time period.
  • Flexible rate contract: A flexible rate business energy contract means prices will fluctuate depending on the current market prices of electricity and gas. Flexible rate customers may end up paying more than fixed rate customers if the prices are high, or less if the prices are low.
  • Large site peak day demand: This type of contract caps the amount of energy that a business can use in a given time period, usually each day. This is particularly useful for businesses looking to keep a tight hold on their finances.
  • Interruptible contract: This allows customers to pay lower prices for less consistent energy. In times of high energy demand, the electricity supply of users on interruptible contracts may be shut off.

How can I switch my business energy contract?

It’s harder to switch between business energy contracts than domestic contracts, but it is still possible. For most businesses, contracts will stipulate a specific ‘window’ during which you are entitled to inform your provider of your intention not to renew the contract when it runs out. This is generally about six months before the end of your contract.

Those who do not adhere to the agreements of these business contracts are likely to face significant fines as a result or else simply end up roped into another year of the agreement. The conventions are different for small businesses, or ‘microbusinesses’, as government legislation allows them certain provisions.

How does business energy for small companies differ?

Yes, a personal loan will mean that you own the car you’re buying in its entirety from the outset. You will pay the full value of the car and ownership is transferred to you. The responsibility is then all on you to pay back the loan at staggered intervals over an agreed time period and interest rate.

What is a micro business?

Some small businesses can be defined as microbusinesses. Government legislation has been put in place to encourage energy suppliers to be more lenient in their terms. Microbusinesses are allowed to inform their service provider of their intention to switch suppliers at the end of the contract, at any point before the notice period.

The maximum amount of notice that microbusinesses are required to give their providers for termination is 30 days. Providers are also required to give microbusiness customers information of how the current deal compares to new prices, as well as how much total energy is used over a year.

A microbusiness can be defined as -

  • Any company with fewer than 10 employees and an annual turnover no greater than €2 million
  • Any company consuming less than 100,000kWh of electricity per annum
  • Any company consuming less than 293,000kWh of gas per annum

What standing charges are payable for business energy contracts?

A standing charge constitutes a portion of your overall bill. The standing charge is a flat rate sum charged for the service itself, with extra charges for the amount of electricity or gas being consumed being charged on top of that. This is charged per day of each billing period, even if no electricity or gas is being consumed. They range from 10p-80p per day for gas and 5p-60p per day for electricity.

The majority of service providers charge standing charges as part of their service. Some however, do not, which provides an alternative option for a business that does not consume consistent, regular energy.

There is no guarantee that eliminating a standing charge would be of financial benefits to individual customers, and we advise to carefully compare all the relevant options before making a decision.

What’s the Climate Change Levy and how might this affect my business energy prices?

All businesses who consume over 33,000kWh worth of energy each day are required to pay the Climate Change-Levy (CGL), on top of the energy bill you already pay. This is a government mandated incentive in order to get businesses using less electricity on a daily basis.

For those who use electricity over this amount, a Climate Change Agreement (CGA) can be signed by your business in order to reduce or eliminate your CGL expenses. This is a government agreement which requires businesses to meet certain obligations to reduce the amount of energy used and increase overall energy efficiency.

How is my energy usage measured?

Energy metre technology is becoming ever more sophisticated as the years progress, and it is now possible for energy companies to measure the raw amount of electricity far more accurately than has been the case before. They do this by using with ‘smart metres’.

The figures given by smart metres are accurate representations of how much energy has been used, rather than a calculated estimate, as has historically been the case. Smart metres can pinpoint the energy usage down to periods as small as half an hour. Indeed, larger companies with higher energy consumption rates are required to have these half-hourly metres installed.

What influences my business energy usage and price?

There are a range of things that influence both the raw amount of energy you use, and the final amount you are charged for the energy. Some of these influences are:

  • The type of metre that measures energy usage.
  • Your financial credit rating.
  • The area in which you’re based; the average price of energy locally and its proximity to power plants.
  • Your electricity energy profile.

What’s my electricity energy profile?

An electricity energy profile classifies all energy users into one of nine distinct categories, based on information such as where you’re based, and how much energy you use. Domestic energy users are ordinarily sorted into the first two categories, with business energy customers being spread out broadly throughout the remaining seven.

Profiles one to four are considered ‘standard demand’ users, and five to nine are ‘maximum demand (MD) users’.

Standard Demand

  1. Domestic unrestricted customers: Generally consists of domestic home customers.
  2. Domestic ‘economy 7’ customers: Generally consists of domestic home customers with ‘economy 7’ meters.
  3. Non-domestic unrestricted customers: Consists largely of small and micro-businesses with no specialist energy requirements.
  4. Non-domestic unrestricted customers: Consists largely of small and micro-businesses with no specialist energy requirements, who use a smart metre.

Maximum Demand (MD)

  1. Non-domestic MD customers with a peak load factor of less than 20 per cent.
  2. Non-domesticated MD customers with a peak load factor of between 20 and 30 per cent.
  3. Non-domesticated MD customers with a peak load factor of between 30 and 40 per cent.
  4. Non-domesticated MD customers with a peak load factor of over 40 per cent.
  5. Non-domesticated MD customers with peak load electricity usage over 100kw.

Written by Peter Adams

    Published on 28-06-2018

    Updated on 08-04-2020

Peter reports on a number of areas in the personal finance sector, with a particular interest in supporting businesses and individuals in the UK services industry.

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