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Business Electricity: Key Things you Need to Know

Business Electricity: Key Things you Need to Know

Business electricity refers to electricity that an energy supplier supplies for business use. Business electricity and domestic electricity come from the same source, but business energy contracts are structured in a specific way that makes it trickier to switch energy suppliers. 

This is why you need to get help from an energy broker. They can compare electricity business prices quickly and discuss with you the available energy options to ensure that you get the best energy contract for your business. This can be especially crucial when you decide to get a new energy contract. Remember that business energy contracts don’t have a cooling-off period. This article discusses business electricity.

Understanding Business Electricity

The prices of business electricity can be volatile, and they can even change every day. This is why it’s a good idea to lock your energy rates by securing a fixed-rate energy deal. Most business electricity suppliers tend to base their energy prices on the electricity usage and business size. The unit energy rates you pay can be cheaper than domestic energy deals, but the business energy VAT can be as high as 20 percent.

You should note that there are some exceptions. If your business utilizes at least 33 kWh of business electricity each day, then you can be subject for a lower rate of 5 percent VAT. Also, your business can qualify for the 5 percent VAT rate if it’s a non-profit or charitable organization. 

This VAT rate can also apply if at least 60 percent of the business energy is utilized for non-business activities. Besides, you can also be eligible to pay other fees like the Climate Change Levy, the Feed-In-Tariff, and Renewable Obligation.

You should remember that there is a difference between domestic electricity and business electricity deals. One of the differences is that a business energy contract can last longer than a home electricity contract. Many households can choose a one-year fixed-term contract while businesses can lock in their energy rates for up to five years. Business electricity contracts are also less flexible, especially when you try to switch energy suppliers and there can be an early termination fee. It makes sense to lock in your energy rates for longer so that you can avoid energy price increases.

There are several business electricity tariffs available on the market. There is a fixed-rate energy tariff that can last from one to four years. The standing charges and unit cost tend to remain the same during the duration of the energy contract. Your energy bills can still vary, but this may depend on the energy usage of your business. But the actual energy rates you need to pay can be fixed during the term of the contract.

There is also a variable rate, where the unit energy rate you have to pay can increase or decrease depending on the current market energy prices. Ideally, if the energy prices drop, then you can pay less money for the energy you use. On the other hand, you can end up paying more money when energy prices increase.

Green energy contracts can also provide more environmentally-friendly energy for your business. Green energy comes from renewable sources or even by offsetting energy generated from non-renewable sources. 

A deemed rate tariff is another type of business electricity tariff. If you have relocated to a new business premises and failed to renew your energy contract, then the energy supplier that supplies energy to the property may continue to supply the premises. Because of this, the energy supplier can place you at a deemed rate. Unfortunately, a deemed rate is more expensive than the other energy rates offered to new energy customers. 

And, if you fail to arrange a new energy contract before the expiry of the current one, your energy supplier can roll you to another new contract. Energy rates are often more expensive than fixed-rate energy contracts. If you have a micro business, this energy contract cannot be for more than twelve months.

Switching Energy Suppliers

If you have a specific business premise, then a business electricity deal can be the right option. The amount of electricity your business uses can determine the business electricity deal. 

It’s also important to note that there are a couple of things you need to know before you switch energy suppliers. You can decide to compare business electricity tariffs and choose a new energy deal when the switching window opens. In most cases, you can do this at least six months before the expiry of your current energy contract. But the switch can only take place when your current energy contract expires.

A business energy switch can often take at least six weeks to complete. Therefore, to make sure that your energy supplier doesn’t roll you to more expensive energy rates, you must compare energy prices and find a new energy deal at least two months before the expiry of your current energy contract.

The good thing is that your electricity supply cannot be interrupted. Your new and current electricity suppliers can work together to arrange a date that they can transfer your electricity supply. This means that the electricity supply to your business premises cannot be affected. Also, the electricity provider can still supply your energy through the same cables. Therefore, there can be no need to drill or dig at your business premises.

You should remember that business electricity contracts don’t give an early termination option. Hence, if you desire to terminate your business electricity contract, then you have to get in touch with your electricity supplier once the switching window opens. Your electricity contract can still be valid until its scheduled expiry date. 

Canceling your business electricity contract means that your electricity supplier cannot automatically roll it onto a more expensive electricity contract. This allows you to look for a better business electricity deal elsewhere. The best way to get the right electricity deal is to work with an energy broker. They can compare electricity tariffs and get quoted on your behalf.

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