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The standing charge and unit rate are the two important comparisons that you need to make when deciding which business energy contract is the most suitable for you.
A standing charge is a fixed daily cost which doesn’t change, regardless of how much electricity or gas you use. The standing charge covers the costs of supplying you with energy, including maintenance, meter readings and the logistics of keeping you connected to the network. Some business tariffs don’t have a standing charge but this doesn’t mean that they are a better option. Generally on these tariffs you pay more for the first so-many units used until the equivalent cost of the standing charge has been reached. After this point the unit rate will usually go down. In most cases, it’s more cost effective to choose a plan with a standing charge. However, if you have a building that needs very minimal heating, then a tariff with no standing charge may work for you.
Even if your plan doesn’t have a standing charge, you may still see it listed on your bill.
The unit rate is the cost for each unit of energy used. It includes other costs such as transportation but doesn’t include costs such as VAT or the climate change levy (CCL). Your unit rate will vary based on your tariff, your payment method, and where in the country you are located.
Let’s say that you have been offered a standing charge of 26.03 pence per day. The amount this will cost you over the course of a year is 0.263 (pence per day) X 365 (days per year). This gives you an annual cost of £99.995.
Then you need to work out the cost of the energy you use each year. Let’s assume the unit rate you have been quoted is 12.03 pence per kwh and your consumption is 10,000 kwh per annum. This will give you an annual cost of £1,203.00.
Therefore your total bill for the year will be £99.995 + £1,203.00 = £1298.995 (rounded down to £1298.99) – this is before other costs such as VAT and the CCL are added.
However, you may be offered a lower standing charge, for example 18 pence per day, which works out at £65.70 a year. But the unit rate may be higher e.g. 18 pence per unit for the same consumption of 10,000 kwh a year. This will work out as £1,800 making a total cost of £1,865.70 a year.
So, even though the standing charge is lower the higher unit rate means the total cost for the year is more. It means that if you have a very low consumption it may be better to compare unit rates rather than the standing charge.
Your SwitchMyBusiness.com personal switcher will be able to advise you on which tariff will be the most suitable for your business needs. Remember, just because it’s the cheapest doesn’t mean it’s the right one for your business.
"Very easy. Bea Luseni very efficient & knowledgeable."This review was posted by Alan Duffy on the 31st of March 2017
Super helpful and easy to work with
"Recommend this company in a heartbeat - Nicole Borneuf was super easy to talk to, was not pushy in the slightest, very helpful and replied with all my questions very professionally and did all she could to help. I had to deal with a few companies to sort my business energy out, all but Nicole were too pushy for my liking and I refused to follow through with them. Thank Nicole - you are a credit to your company, thank you for making the stressful energy change so easy."This review was posted by Mia Drew on the 29th of March 2017
An Extremely Competent Company
"Switch my business has not only helped my SME secure a good energy deal for the second year running but Jessica swiftly found a alternative supplier for me when I was let down on the day of switching by the new contractual provider I had chosen some 4 months previously. Being suddenly out of contract and without provider is everyone's energy nightmare. Greatest thanks."This review was posted by S McMillan on the 29th of March 2017
Helpful, friendly and we saved lots of money!
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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