What to Consider When Buying Business Energy Contracts
Domestic and business electricity contracts are different massively based on whether you’re a domestic or commercial consumer, and this can often make running your company’s electricity and gas supply much harder if you’re not up to speed with commercial electricity contracts. As the majority of UK businesses use gas and other forms of electricity for their day-to-day operations, the gas and Electricity Authority (EMA) regulates gas and electricity contracts for UK companies. The majority of businesses have to be members of one of the six trading areas to buy gas and electricity from the EML, which is why so many smaller and medium-sized companies don’t even exist in the UK. This makes the market less competitive, and prices higher for consumers. So how does one go about finding the right gas and electricity supplier?
Firstly, you need to decide how long you want your contract to run for
The standard domestic gas and electricity tariffs are for 10 years and there are further financial benefits for those that take this route. If your company only generates a small amount of electricity or gas (perhaps less than a few kilowatts a month) then you could get away with a shorter initial contract, as the savings will more than pay for the heating and cooling-off period. On the other hand, if your business has a high usage rate, or your main customer uses a large amount of electricity and gas at any given time, then your domestic contracts may be extended. An extension can also be beneficial if you have a particularly efficient boiler or system, as the longer your contract lasts, the greater financial benefit you’ll receive when it comes to making improvements to the system.
You should also bear in mind that most domestic contracts
come with a ventilation-inlet charge, otherwise known as the ventilation tax. This charge, which is charged to all businesses that use ducts to bring air into their premises, is largely unnecessary as most businesses can easily cope with this cost, especially if they’ve installed effective ventilation systems in the first place. Business energy contracts do still contain a ventilation tax, so you should still factor this into your budget. The ventilation tax is largely unnecessary as most businesses already have effective ventilation systems in place. The main reason companies pay the tax is because they want to attract new customers and the cost of doing this is relatively insignificant when compared to the savings you can make by switching to a more cost-effective supplier.
It’s important to remember
that most domestic gas and electricity providers in the UK also offer ‘billed’ gas and electricity contracts. These are essentially the same as standard contracts, but they include several added extras. As well as being similar to standard contracts, they also usually come with excellent user deals, which can save businesses a lot of money on running costs. For example, these sorts of business energy contracts often feature a reduced weekly gas and electricity bill, sometimes by up to 20%, as well as other reductions throughout the year on both gas and electricity.
It’s important to understand
that if you get a fixed-rate gas or electricity supplier then you’re stuck with it for the entire duration of the contract. However, a variable rate gas or electricity contract comes with an introductory phase, whereby your rates will increase at specified times. Once your initial contract has ended, you’ll be able to switch to the fixed rate. However, there are a few differences between a fixed rate and a variable rate gas or electricity contract, so you should read through the terms and conditions properly before signing up to be sure you know what you’re signing up to.
Some of the other factors
to consider when thinking about business energy contracts include whether you want to be billed according to the household gas efficiency rating or the heating-inflow rate. These ratings are determined by a specialist regulator, so while they may appear confusing, they’re an accurate representation of how efficient your existing supplier is. If you’re unsure, it’s important to ask your supplier whether they use a rating system and whether they have information on their website regarding their specific performance certificates. The average size of household gas appliances is another important factor to take into account, because if your equipment is too large then you could lose out on money over time.