How much could your business save? Find out now!
Or, you can call us on: 0800 411 8830

What is the difference between domestic and commercial energy rates?


This article was updated on 12th September 2016

This month, a price hike by Co-Op saw increased speculation about rising prices for domestic energy bills. You may assume that if domestic prices rise, business prices will too.  However, commercial and domestic energy bills are have some very important differences…

Fixed price business energy

Traditionally, business energy is taken out on a fixed rate contract, over a period of up to 4 years. The benefits of fixed price contracts include better budgeting – as you know how much you will be paying for energy each month – and protection from market fluctuations. However, if energy prices drop in the middle of your contract, you won’t be able to take advantage of the reduced rates.

Domestic rates allow for a cooling off period, something that commercial energy contracts do not.  With that in mind, you need to be really sure you’re making the right decision when you agree prices for your business. Likewise, terminating a business energy contract tends to be more expensive than ending a domestic energy contract.

Energy suppliers know when domestic users will use most of their energy and at which time of the year but it’s much more difficult to predict business energy use. Some energy suppliers will buy energy for business contracts up front at the beginning of the contract, whilst others buy in bulk ahead of a business taking out a contract.

Predicting business energy consumption

Business energy users tend to consume energy at different times of the day, making usage predictions harder. While domestic users benefit from so-called ‘certainty’ of usage, business energy users don’t which is why energy suppliers have different rates for domestic and business energy users. This is changing, however, with the introduction of half-hourly, or smart, meters. Smart meters allow businesses to see almost real time data on their energy usage, meaning that future contracts can be negotiated with greater precision.

Some business energy contracts will have minimum and/or maximum usage levels which, if exceeded, can result in a fine. Therefore it’s important for businesses to know as much about their energy usage as possible when negotiating a contract.

Click here for a quick business energy quote…

Location,credit rating, annual consumption

Commercial energy rates are also dependent on where a business is located, along with its credit rating and annual consumption. Business energy requirements tend to be more complex than consumer energy – particularly when there are multiple sites involved.

Market driven business energy prices

Commercial energy prices can change on a regular basis, unlike domestic prices, because they are market driven. It’s for this reason that you can be given a price one week and call back the following week and the price you were quoted is no longer available – it may have gone up – or it may have gone down. This is a problem with business energy prices – you can find what you think is a great price one day but because of the nature of the market you could find a cheaper price the next week or even the next day – or you may find that the prices have gone up over night.

Domestic energy prices, on the other hand tend, to be less variable, changing perhaps only once or twice over 12 months.

Comparing commercial energy prices and switching to the best business energy deal can be a minefield. Our experts closely track movements in the energy market meaning we can easily find the best deal for you, leaving you to go back to running your business. Give us a call on 0330 0100 251 (or request a call back using our form) but remember that prices can go up or down overnight!

Related Articles

the arguments for and against fracking

Energy News 24/03/2017

Check out our weekly round up of the stories that have been making the headlines in the energy world over the ...

Read More
Business Brexit update

Brexit Small Business Update

Worried about Brexit or couldn't care less? We tell you what the next steps are, and what you should do to pre...

Read More
Power Plant Image

Energy News – 17/03/2017

Want to know what stories are making waves in the energy industry this week? Here are the big stories from the...

Read More
Excellent, 9.7 / 10

Helpful, friendly and we saved lots of money!

"Jessica Purnell was helpful and friendly, she made the whole process easy and simple AND we saved lots of money thanks Jess"

This review was posted by Melanie Baker on the 23rd of March 2017

Quick & Easy

"Kabibi was very helpful and the whole process was very efficient. The one small reservation I had was that I was phoned up by Kabibi almost immediately having received my online quote - which wasn't enough time for me to finish reading the quotes! Fortunately she was able to assist me in a greater savings on both Gas & Electricity, and so as long as the switchover is seamless I will remain very happy with the service."

This review was posted by Amanda Brown on the 21st of March 2017

Great Service

"I am very happy with Aaron's service. He has helped me save over £1000 a year on my businesses energy costs."

This review was posted by R Thomas on the 21st of March 2017

So helpful and quick

"Prompt advice and help from Ashley. I hadn't realised changing energy suppliers could be so easy and quick. Thanks so much. Will definitely recommend!"

This review was posted by charlotte on the 21st of March 2017

Easy and stress free

"I hate this time but f year when it's time to renew my electricity. I decided to use a comparison site this time round and never looked back. My advisor (Aaron Gallagher) was polite and knowledgable and efficiently changed my business."

This review was posted by Kevin on the 21st of March 2017