Is Business Energy Cheaper Than Residential?

Business Energy: Businesses rely on quality energy supply to keep their work running smoothly during working hours as the electricity is essential not only for lighting rooms but for powering computers & equipment. Energy tariffs for domestic and business aren’t the same. The actual plans themselves are very different in both cost and contract details.

Is Business Energy More Expensive?

Though business energy bills often sound and appear more expensive than domestic ones, business energy rates are actually cheaper than their household counterparts. Businesses pay a lower per-unit price for energy. Larger businesses pay lower unit rates. Most businesses, however, end up paying a VAT at an absurd rate of 20% on business gas and electricity.

This is compared to the measly 5% rate paid by people who purchase domestic energy. Along with this, additional costs can easily bump up prices and increase financial strain. This includes the Climate Change Levy or CCL, which has a rate per kWh. Nonprofit businesses qualify for a reduced VAT rate of 5%, but those are few and far between.

Business Energy vs. Residential Energy

We’ve established that business energy has a lower unit rate but requires additional charges, which increase the cost. When you carry out an energy business comparison with domestic energy, the latter is usually on a per monthly basis and is offered dual fuel services.

They are provided with reasonable cooling periods after their comparatively short contracts and different tariffs. Business energy is sealed on larger contracts, given many different tariffs, and not offered dual fuel. These contracts usually extend for five years, for which you are locked into your supplier and the no cooling period only solidifies this.

Business Energy Tariffs

Tariffs are given to businesses on a case-by-case basis. This initially sounds good considering the supplier will offer you a deal based on your business’s needs and requirements, meaning you won’t get anything less than what you need but also won’t get anything more.

Upon taking another look, you find out that this only makes it difficult to compare tariffs with other suppliers as there is no set deal. Comparing rates becomes more time-consuming. Business tariffs have a fixed rate, making you pay the same rate from the day the contract begins to the day it ends. You won’t get the same level of protection as a domestic user, but you will get a new meter profile.

Business Energy Contract vs. Domestic Energy Contract

As explained above, contracts are different for business energy and residential energy. Business energy contracts include a fixed rate, longer duration, and extremely low cool period. This is in contrast to the domestic energy contracts, which pay on a monthly basis, have a lower duration and much higher cooling period. Domestic contracts can be severed usually quickly, and people can switch suppliers easily.

This is not an option for businesses who are stuck with their contract till it expires. If during this contract the market prices of energy drop considerably, businesses will still be forced to pay fixed rates and will not benefit, giving residential energy the opportunity to become cheaper. Business energy contracts are more complex than domestic energy contracts, making it much more advisable for businesses to seek the services of an expert energy broker.

Conclusion

Business energy is much more expensive than domestic energy, which is why they should seek professional services to find the best supplier and contract for them.

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