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Average electricity and gas bills for business users

As energy is mostly a commodity product, a company's aim should be to simply find the lowest kilowatt-hour (kWh) unit prices available to them.

These days, with the deregulated market, the pricing for most business gas and electricity per kWh is the same as for residential customers. Although wholesale prices have remained flat, retail charges have risen between 12% and 25% over the past four years.

Average electricity and gas bills for most small and micro businesses have also increased between the same values in unit rates and standing charges.

Pricing trends for electricity 2012 to 2017

Average electricity prices per kWh 2012 to 2017

2012 saw some of the lowest rates available and have steadily increased over time.

The unit charge per kWh increased 12% from an average of 9.6p/kWh with daily standing charge costs rising by 25% from 22.12p to 27.74p per day.

Some recent quotes undertaken have seen these even higher with customers receiving proposals of over 35p per day. More recently wholesale prices have reduced with some providers passing the reductions directly onto their customers.

Average annual billing costs for small companies

The wholesale market

Unit cost graphic per kWhGeneral wholesale market pricing for electricity has been fairly flat over the past four years although the retail market has experienced increases.

Most of these increases are from Government taxes and investment in infrastructure such as smart meter installation.

With these changes, most average bills are estimated to have increased by some 22% over the past few years. Businesses have experienced the highest prices since a decade ago.

Electricity averages

The average SME pays 10.94p per kWh for their unit price with an average daily charge of 28.3p per day. Larger users generally pay 9.4p per kWh with a higher standing charge of 50p per day.

Gas averages

Gas prices per kWh are far less with small companies paying an estimated 2.75p per kWh with a daily charge of 60p per day. Larger corporations with higher consumption usually pay similar figures.

How can I ensure I get quoted market leading kWh prices?

There are still plenty of ways to get caught out and end up with far higher rates than your competitors. To help you avoid such a scenario, here are our top 10 tips to ensure you get the best possible deals on business electricity and gas.

Top five methods to reduce bills

  1. Business energy contracts are not quite what they seem. Even if you have a one-year contract, you still need to cancel the agreement about eight weeks before the end.

    If you don't do this, your rates will be rolled over for another 12 months, and prices will increase by approximately 30-40%.
  2. Once you've terminated your current contract, you should get new quotes. The best method is to use a price comparison service for all business energy products.
  3. All business-related quotes are only valid for the day you get the prices, so you need to be quick to lock in the rates quoted.
  4. You can elect to have a one, two, or three-year contract. All prices are fixed and will not vary if wholesale prices increase during the contract period.
  5. Unless you're a micro-business user, your energy company will not inform you when your electricity or gas contract is up for renewal so you must take control of the switching process.

Bonus tip - pay by Direct Debit and you could save an additional 2%+ per year.

Additional ways to manage costs

  1. If you're a large user of gas or electricity, then expert help is required to ensure your kWh pricing is the cheapest. Various options are available including group buying (with other organisations), general tendering as well as direct pricing management.
  2. If you're out of contract or have taken on a new tenancy, then you're placed on "deemed rates". These are the highest rates in the marketplace so you should get quotes quickly to reduce your pricing by around 70%.
  3. Some contracts that use 100% renewable energy sources allow you to avoid paying the Climate Change Levy (CCL) although the rates are higher than the cheapest available in the market.
  4. The wholesale electricity market fluctuates but the lowest electricity prices are usually during the summer months when demand is low. This will be the best time of year to find a new deal if your contract terms allow it.
  5. If you haven't looked at your contract unit prices for a few years, then you'll be paying too much. Some businesses we deal with have been paying 15p/kWh for electricity whereas the market rate is nearer 9.5p/kWh, all because they haven't checked the latest rates available.

How to switch to a new contract

You can either use the services of a broker or do it yourself. Brokers like ours at PowerExperts know the industry inside out, have all the energy companies' tariffs available, and will find the best prices.

You can also do it yourself by getting prices direct. Not all providers have live prices on their websites, so this may take time. The prices offered should be the same no matter which route you take.

By far the fastest and easiest way to get things done is to call the PowerExperts broker team. Our friendly customer service experts will find you the best deal possible, so why not get in touch today?

Sources for the data