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Friday, 17 September 2021

Making Sense Of Business Electricity Bills

The great majority of businesses out there have some need to use electricity, whether that be for running equipment and machinery, or for computers and lighting


Where it is used consistently then it can really add up the costs of running a business, especially where they do not stay on top of looking after their electricity contract. 


Making Sense Of Business Electricity Bills

Where a business has not actively stayed on top of what electricity tariff it is on or the size of their latest electricity bills then it is likely to be the case that they are not on the best deal that is available. 


This is because when a business comes to the end of their electricity contract, they are automatically put onto a new deal that is often much more expensive than the one that they were on before. 


In order to avoid this from happening, businesses should check their electricity bills so that they can see exactly how much they are paying for the electricity that they use. 


However, it is likely to be the case that if a business has not negotiated a new deal that they are paying more than what they necessarily should be. 


This can have quite an impact on those smaller businesses where cash flow is restricted. 


In order to ensure that a business is on the best possible deal, they should compare business energy tariff deals here.



Things To Look For On A Business Electricity Bill

The electricity bills of businesses are very different from those of residential properties and come with a lot more information on them, such as supply number, cost prior to VAT being added, plus several other key pieces of information. 


Whilst most businesses are likely to simply focus on the overall cost of the electricity bill, it is important to actually look at and be aware of both the standing charge and the unit cost of the electricity. 


The unit cost is the amount that a business pays for each and every kilowatt of electricity that they use. 


The standing charge is what is charged by the electricity provider for having the electricity supplied to a business premise and covers the cost of maintaining the national grid infrastructure.


The most important thing where these things are concerned is the idea that there is not a one size fits all solution for when it comes to the best electricity rates. 


Whereas some businesses are better off by settling for a fixed tariff that does not come with a standing charge, others find it better to be on a variable tariff that has not only a standing charge but also a unit cost. 


The reason for this is that all businesses are different in their size, their location, and in how much electricity they use.



The Cost Of Business Electricity

A micro business that has ten employees or less can expect to pay about 13 pence for each kilowatt of electricity that they use and be subject to a standing charge of in the region of 28 pence per day. 


The reason for this is due to the fact that they only use a small amount of electricity over the course of a year, between 5,000 kilowatts and 15,000 kilowatts, which results in higher costs.


The vast majority of smaller businesses in the United Kingdom (those with fewer than 50 staff) use anywhere between 15,000 kilowatts and 25,000 kilowatts of electricity on a yearly basis. 


The unit cost for this roughly equates to around 11 pence for each kilowatt used and the standing cost is approximately 25 pence each day. 


A medium-sized business can expect to pay less for their electricity than those businesses that are smaller, as they use much more of it and so their provider can buy it in bulk from the wholesaler. 


Those businesses that have as many as 250 members of staff, typically use in the region of 25,000 kilowatts and 50,000 kilowatts of energy on an annual basis. 


The individual unit cost for electricity, when used in these types of quantities, is 10.5 pence per kilowatt, with a standing charge of 22 pence each day.


Although the cost difference paid by different-sized businesses is not huge, over time these costs do add up. 


This is an important reason as to why businesses should always make sure that they are on the best possible electricity rate.



Things That Impact On The Price Of Electricity

It can be the case that the cost of electricity changes on an almost daily basis. It can even be the case that it changes on an hourly basis. 


This constant fluctuation of the price of electricity can make things difficult for businesses. The price that electricity is set at is determined by a number of different factors.


1. Global Events - worldwide events that have impacts on how businesses use electricity and on how it is generated have a direct impact on the price of electricity. 


These types of events include the likes of a global pandemic, a large natural disaster, or an international conflict of some sort. 


They are also responsible for having an impact on demand for electricity, with it either going up or down as a result. 


It is important for businesses to consider these events when there has been a change in the price of electricity on their energy bills.


2. Generation Of Electricity - the cost of generating electricity constantly changes and is based on the current levels of demand for electricity. 


An example of this is how during the hours of 9am to 5pm demand for electricity from businesses is at its greatest, thus putting an incredible amount of pressure on the national grid system. 


Because of all of this demand and the strain that it puts the infrastructure under, the cost of producing electricity goes up. 


In contrast to this, there is much less demand for electricity during the evening and at night, and so the cost of electricity during this time goes down.


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