How does business electricity differ to domestic electricity? After all, businesses and homes pay for the same stuff at the end of the day, don’t they?
In simple terms, yes. But there are a number of crucial factors which affect the way electricity is paid for, compared to domestic electricity.
Home electricity is packaged and priced in a way that offers the upmost convenience to homeowners. These are simple packages where typically the price won’t change for a number of months.
Domestic energy is usually provided on a rolling contract, so domestic electricity users can switch supplier fairly easily.
With business electricity, though, the business is typically tied into a contract with a definitive end period. This could be one year, two years, or more.
At the start of the contract, a business electricity supplier will usually buy all the electricity it expects the business to use.
Once the contract is over, the prices can change more regularly, as they are tied to the daily wholesale prices of electricity.
An energy supplier may give the business the choice of a fixed price deal, or to pay variable prices based on the wholesale price of business electricity.
This doesn’t necessarily make business electricity cheaper or more expensive, it simply means it’s paid for in a slightly different way.
Another difference which affects the price of business energy is what is known as the ‘profile class’ of an organisation’s energy meter.
These are used when a meter is read manually, and doesn’t automatically submit energy readings to the supplier every half hour.
Profile classes help energy suppliers estimate the amount of energy used throughout the day, and account for seasonal variations in business electricity use. They allow suppliers to send more accurate bills so businesses are charged fairly.
Typically, business electricity contracts have longer terms than domestic contracts too.
These differences might make business energy seem more complicated than domestic energy, but for businesses, there are a number of distinct advantages.
For example, a large business may be able to enter into a flexible, bespoke contract with its energy supplier. This allows the business to purchase electricity as and when it chooses. Since the price is based on the wholesale market price, this allows businesses to have more control over what it pays.
An energy supplier may also be able to associate business electricity contracts with renewable energy sources, such as hydroelectric and wind power. This is useful for businesses which wish to improve their carbon footprints.
On a similar note, businesses and individuals who produce their own electricity can benefit from the government’s feed-in tariffs. This means firms are essentially paid for producing their own electricity, and selling it back to the National Grid for other customers to use.
Businesses may also be given access to a dedicated account manager, who will handle their business electricity needs at supplier side. This ensures issues can be quickly resolved, and any changes to circumstances can be quickly reflected in billing and accounts.