Business energy explained

When it comes to energy, businesses and homes are very different. Homes benefit from an energy price cap, a cooling-off period, and simple switching rules. Businesses don’t. 

Business energy contracts are complex. And, even if you sign it months in advance, your new contract won’t start until your current one ends.

Knowing how energy pricing works can help you stay in control of costs. Here’s everything you need to know.

Is there a price cap on business energy?
No, business energy isn’t capped like home energy. The energy price cap, set by Ofgem, limits what suppliers can charge homes on standard tariffs. It changes every 3 months based on wholesale prices and other costs. 

For businesses, rates vary based on:

• usage
• contract terms
• location
• market conditions.
   

Why isn’t there a business energy price cap?

Unlike homes, different businesses use energy in different ways. Suppliers tailor contracts to each business. This makes a universal cap impractical.

How do business and home energy contracts differ? 

Business energy deals are not as simple as home ones. Here’s what sets them apart.

• Rates and charges

Business energy rates aren’t capped. Businesses can also face extra costs. Like the Climate Change Levy. And a 20% VAT rate, compared to 5% for homes. Some businesses qualify for the lower rate.

• Contract length

Business energy contracts last between 1 and 4 years. This offers price stability, but less flexibility. Home contracts usually last 1 year.

• No cooling-off period

Once you sign a business energy contract, you're locked in. There’s no 14-day window to change your mind, unlike home deals.

• No dual fuel discounts

Homes can save money by bundling gas and electricity. Businesses have to negotiate separate contracts.

• Switching rules 

Home customers can switch suppliers at any time, but they might have to pay an exit fee. Businesses have to wait until their contract’s renewal window. This can be up to 9 months before expiry.

How to manage energy costs

With all this in mind, you need to be proactive to keep energy costs in check. Here’s how.

1. Compare renewal rates 

Don’t just accept your supplier’s renewal offer. Compare other suppliers’ rates to find a better price. 

2. Consider fixing your rates

Fixing means a fixed price. So you’re shielded from market spikes.

3. Monitor use

Find areas where you can cut energy waste. Simple changes can save money. For example, switch to LED lighting. Or use energy-efficient appliances.

4. Get help from the experts

Brokers, like Bionic, make things simple. They compare trusted suppliers for you. They’ll make sure you’re on the best contract for your needs.

What if you can’t pay your bill?

If you’re struggling to pay, speak to your supplier. They might work with you to set up a payment plan that fits your budget.

Should you fix your rates?

Fixing your rates means stable bills. This helps avoid price volatility. Bionic compares trusted suppliers to find their best fixed rates.