Why compare business energy tariffs?
A National Grid fire has shut down a key power cable, causing rates to soar and some suppliers to temporarily stop selling. We’re working hard with suppliers to find solutions for customers needing new energy contracts or renewals. ☎ Customers with concerns, call us on 0800 156 0899
Most people compare business energy tariffs simply to save money. Switching to a business gas and electricity deal that's been designed for your exact needs could save you hundreds, if not thousands, of pounds every year.
This is especially true if you've never switched before or you've let an existing deal expire without sorting a new one. If this happens, your supplier will place you on its out of contract rates, which can be twice as much as contracted rates.
But before we take a closer look at the types of energy deals on offer to business owners, let's confront the elephant in the room - why are energy prices always rising?
What affects business energy prices?
Right now we're seeing energy prices hit record highs - and some suppliers are temporarily pulling out of the market - because a fire at a National Grid site has knocked out the main power cable that imports electricity to the UK from France.
It might feel like energy prices are always rising, but they actually fluctuate quite a bit, which can make the timing of your switch all the more important. To help make sure you're on the best deal, our tech-enabled experts will monitor the rates on our panel of trusted suppliers against the market trends.
But why do prices fluctuate so much? There are any number of reasons why prices go up and down, ranging from an increase in demand to a natural disaster or conflict in an oil-rich country. Right now we're seeing energy prices hit record highs - to the point where some suppliers are temporarily pulling out of the market - all because a fire at a National Grid site has knocked out the main power cable that imports electricity to the UK from France.
Here are some more things that affect the rates you pay for business electricity and gas:
- An increase in demand - Energy prices dropped to record lows during the first lockdown of 2020, as industrial energy demand plummeted. But as things slowly get back to normal and the demand for power increases again, so the prices go back up. In fact, the cost of energy has risen by 50% over the last six months and gas prices have hit a record high.
- Global events - It sounds unlikely, but uncertainty in a country thousands of miles away can affect the cost of a cuppa in the UK. Oil prices are influenced by global events, and it can all come back to supply and demand - if there's conflict, uncertainty, or a natural disaster in a country that produces oil or gas, this will limit production and accessibility, which then pushes up prices. For example, the 2011 conflict in Libya, caused oil prices to jump to a two-and-a-half-year high. And in 2019, a political crisis and U.S. sanctions in Venezuela has caused a spike in oil prices that pushed up global gas and electricity prices.
- The strength of the pound - As with any commodities, fluctuations in currency value can affect the cost of gas and electricity. As the UK imports a lot of its energy from Europe, the strength of the pound against the euro plays a part in costs. If the pound is strong against the euro, then gas and electricity prices should fall as energy is cheaper. If the pound is weak against the euro, prices are likely to rise. This is one reason why we expect energy prices to rise as the impact of Brexit begins to kick in.
- The weather - There are a couple of ways the weather can affect energy prices. A cold winter - like the Beast from the East in 2018 - increases the demand for energy to heat our homes and workplaces and so prices go up. But as we're using more and more renewable energy sources - Britain is the world’s biggest offshore wind generator, making up almost 40% of global capacity - a drop in wind means more natural gas is diverted to power stations, leading to increased prices. You also need to bear in mind that energy suppliers buy wholesale gas and electricity in advance, and prices are linked to forecasts. This means that if a ten-day forecast suggests that there will be particularly good weather, then short-term forward prices will probably drop fall. Long term temperature forecasting is more difficult, but can still affect prices.
- The energy price cap - Introduced to end 'rip-off' energy prices, the energy price cap has merely succeeded in giving suppliers a baseline they can use for their energy prices. As predicted by many before the cap kicked in, prices are bunching around the level of the cap, which means there are fewer and fewer competitively-priced deals, even if you switch to a fixed rate tariff. Although the price cap only directly affects domestic energy customers, prices have risen right across the board.
The factors listed above are the main things that affect wholesale energy prices and, in turn, the rates you pay to your business energy supplier.
But are other things that add to the cost of your business energy bills, like distribution and transport costs, Climate Change Levy (CCL) payments, and VAT. For more on these costs, check out the Bionic guide to understanding business energy bills.
Now you know more about what affects energy prices, here's how to make sure you're on the best deal.
What are out of contract rates?
Out of contract rates are a default tariff that your supplier uses when:
- Your current contract has ended and you haven’t arranged a new one with your existing energy provider or another supplier.
- Your switch to another energy supplier has been delayed, meaning there’s a gap between the end of one contract and the beginning of another.
The only way to avoid paying out of contract rates is to sign up to a new energy deal, either with your current supplier or a new one.
The simplest way to get an energy deal that meets the unique demands of your business is to let the tech-powered experts at Bionic do the leg work for you. We work closely with a selected panel of trusted energy suppliers, to make sure you get great rates and outstanding service.
And, unlike brokers and price comparison websites, Bionic uses smart technology to speed up the energy price comparison process, meaning we only need your business postcode to compare business gas and electricity tariffs and help you switch to a better deal.
Our experts will guide you through the whole energy comparison and switching process, but it always helps to have as much information to hand as possible in advance, including an idea of the type of tariff you want to switch to.
Before you start your comparison, it’s worth knowing that there are different types of business gas and electricity deals available, here are your main options:
Fixed-term business gas and electricity tariffs
A fixed-term tariff usually lasts between one and four years, during which time the unit cost and standing charges stay the same. Although your bills will still vary depending upon how much energy you use, the actual rates you pay are fixed for the term of the deal.
Fixed-term deals are the most popular type of energy tariff for businesses, as they are an effective way to protect against price hikes, and the fixed rates can help with budgeting.
Switching with Bionic means you’ll never have to worry about being automatically rolled onto more expensive rates at the end of the term - we’ll keep an eye on your contract end dates and find the best deal for your business, year-after-year.
Blend and extend tariffs
These deals are a bit more complex than fixed-rate deals, as they allow you to extend the length of your current contract with the same supplier, who will then reward your loyalty with lower rates.
This type of deal can help you cut the amount you pay for gas and electricity, and could be a good fit if you're happy with your current supplier, but you’ll probably be able to get even cheaper rates by switching to another supplier.
Flex approach tariffs
If you run a larger business, it might be worth bulk buying your energy in advance, so you know how much you’ve paid when it comes to using it. On a flex approach contract, you can take advantage of favourable wholesale rates by buying your energy for the months or years ahead, usually when costs are low.
Although this can save money over the long term, it can be a risky strategy that can see you out of pocket if you’re caught out of contract when energy prices are high.
Pass through tariffs
A pass-through tariff splits your bill in two between the wholesale energy costs, which is fixed, and the other elements that make up the unit rates, which vary. This means that things like Transmission Network Use of System (TNUoS) charges, National Grid levies and Feed-in Tariff charges can all change up to four times every year, the idea being that the supplier passes these non-commodity costs direct to you and the risk that these may increase over time.
These tariffs are more suited to educated buyers who don’t need as much price certainty.
What to consider when choosing an energy deal
Whichever type of tariff you choose, you’ll need to bear in mind that business energy suppliers don’t offer dual fuel deals - even if you agree to a gas and electricity deal with the same supplier, these will still be two separate energy contracts.
And consider that the rates you pay will depend upon a number of factors, including how much energy you use, where your business is located, and its financial situation - a poor credit score could see you paying higher rates, as your business is seen as a higher risk.
The quickest and easiest way to find the best business energy deals is to speak to the tech-enabled human experts at Bionic. We can find the best business gas and business electricity tariffs for your business in a matter of minutes - to get started, let us know your business name and postcode at Bionic.co.uk, or give us a call on 0800 086 1326.