Navigating the business energy maze

Navigating the business energy maze

Loyalty pays? In the case of many gas and electricity suppliers, it would be more accurate to say loyalty costs! The price of doing nothing can be substantial.

If you want to save money on your home energy bills, you can’t go far wrong by watching Martin Lewis’s TV show or visiting His consistent advice is to shop around once your contract comes to a close – whether it is your mortgage, energy supplier, car insurance, broadband or credit card.

When it comes to gas and electricity, he has even set up a Cheap Energy Club. It is so simple, there is no excuse.

But this only applies to households. When it comes to business energy suppliers, you can’t join Martin’s club, and sourcing the best deal is far more complicated.

For this reason, far too many businesses stick to their existing supplier, long after any introductory or discounted rate has expired.

It means businesses end up paying extra for no reason and might as well be heating the office by burning banknotes.

What’s the difference between home and business energy?

Suppliers find it much easier to estimate the energy consumption of householders. They can usually get a pretty accurate estimate just by the location and type of property. With regular meter readings, the bill estimates become almost as reliable as the genuine invoice.

Not only can suppliers calculate projected energy consumption, they are also committed to producing easily understandable tariffs. The industry regulator Ofgem insists that bills comply to advice from the Plain English Campaign.

Easily predict usage and straightforward tariffs mean that comparing energy packages is a straightforward process. Comparison sites can quickly find the best deal.

Business energy supply is a different matter. Suppliers rarely offer businesses standardised off-the-shelf tariffs.

For a start, energy demands fluctuate wildly. You could find three equally sized units on a business park – one of which is used for heavy-duty manufacturing, one used as a warehouse and one as a call centre. Some businesses are seasonal with activity coming in peaks and troughs. Some operate 24 hours a day, and others stick to a conventional 9-5.30.

Business contracts can often cover longer periods of time. Five-year deals are not uncommon, which allows the supplier to plan or even bulk buy energy. Other businesses will wish to remain agile and only sign 12-month contracts, especially those on short-term leases.

When it comes to business energy supply, one size most certainly does not fit all.

Confused? You will be.

Accepting the fact that business energy needs vary dramatically, surely working out a package can’t be too difficult?

In fact, there are plenty of factors to take into consideration.

Take the example of how energy bills are taxed.

At home, the taxman adds a flat 5% for VAT, but for business, inevitably, there are added complexities.

Business energy is taxed at 20%. But it is taxed at 5% if…

  • You are a charity or a non-profit organisation
  • Part of the energy is used for domestic purposes. For instance, if your business is a care home or student digs, then the energy used in that part of your business is taxed at 5% (if you can calculate that!). If this amounts to more than 60% of the energy used, then the 5% applies to the whole bill.
  • You don’t use much energy. You may be able to make the most of the HMRC’s ‘De Minimis’ Domestic rate VAT (5%) is applied if the combined consumption at a premises does not exceed an average of 145 kWh/day (4397 kWh per month). And you will also be exempt from the Climate Change Levy (are you keeping up!).

Ah yes, then there is the Climate Change Levy (CCL), an environmental tax on your company’s electricity and gas use. The rate is currently 0.811p/kWh for electricity.

With so many factors at play, it can be hard to decipher the best business energy supply contract.

And you really must get it right the first time. Business energy contracts, unlike domestic ones, tend to not have cooling-off periods where you can change your mind. And ending a contract can often be far more difficult.

Energise your savings, reduce the stress

The great news is that, assuming you get the right deal, business energy should be cheaper than household bills.

The even better news is that Rubix VT can find the right deal for you – and save you the hassle of comparing suppliers.

Just send us a copy of your current bill and we will find the right supplier and work out the best deal. We can work out if it’s best for you to have a fixed or variable deal, and the optimum contract length.

Researching the business energy market can be a tricky exercise – but we have the experience and knowledge to find the best deal. Not just for you – but also for the environment. We know how important it is to use renewable green energy.

We have one world, one planet – ONE chance to get things right!

Get in touch!