Did you know that in some parts of the UK, commercial electricity prices are over a fifth more (22.7 ) than in others simply because of where the business is based? The difference between the lowest electricity prices for businesses using an average of 25,000 units (kWh) a year, ranges over £500 from the cheapest in the North East of England to the most expensive commercial electricity prices in the Scottish Highlands. The disparity is largely down to hidden transmission costs that each of the 14 regional electricity boards charge to business electricity suppliers for distribution across the National Grid.
The extra electricity prices resulting from transmission costs increases with distance, making Scotland, Wales and the West Country the most expensive. Ofgem claims the cost of transmission for domestic customers only represents around 5 of the bill but for major energy customers, this add on to their business electricity prices is much higher.
Postcode is just one of about 10 factors that determine what suppliers look for when weighing up what electricity prices to charge to each of their business customers. Whilst you can’t do much about your location, it’s worth knowing what else can bring down commercial electricity prices. New customers, for example electricity prices, are offered significantly lower than renewing customers and so comparing electricity prices and switching suppliers once a year is a good habit to get into.
As well as postcodes and how long you remain a customer, other variables that determine what electricity prices each business is eligible for include: length of contract, preferred payment method, company credit score, annual consumption & meter profile. The first two digits in a meter reference number range from 00 08 which is a classification related to consumption most business electricity customers are 03 or 04 profile.
All these variables inevitably lead to some pretty complex business electricity price strategies among suppliers and mean there are thousands of different tariffs for businesses, making it very difficult to compare electricity prices without help from a business electricity price comparison service. Electricity prices charged to one business can be as much as four times that charged to an identical business elsewhere depending on how savvy they were (or how much help they received) when they entered into their energy contract.
The frustrating part of knowing that you are paying over the odds is that you are often unable to do anything about it for months. Business energy contracts can be anywhere between one and five years in length and only allow you to switch suppliers during the renewal window. These windows are different for each supplier but open and close somewhere between 120 days and 28 days before the contract ends. By innocently waiting until the end of the contract, as the vast majority of businesses do, you miss your window and end up being rolled into a new contract for at least another year on uncompetitive ‘standard rates’.
Any businesses wanting to know when their renewal window is or to see if they are currently paying a fair price for their electricity can use our Switching Tools. The calculator shows how much a business is paying compared to the best electricity prices charged to other businesses sharing the same postcode. It uses information that Make It Cheaper has recorded since 2007 and includes business electricity tariffs from around the UK ranging from as little as 7p/unit (kWh) to as much as 32p/unit.
Author Resource:
Make It Cheaper, the UK's leading independent price comparison and switching service for business electricity & business gas. Contacts For interviews, images or comments contact: Jonathan Elliot Marketing Manager http://www.makeitcheaper.com 0800 970 0225
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