Business Energy for Small Businesses

еса business energy T 01246 290 490 W ecaBusinessEnergy.com buy better, use less Business Energy for Small Businesses Understanding the Difference Between Commercial and Domestic Energy Here we will be looking at how business energy works for small businesses by comparing the differences between commercial and domestic properties. Benefits for Micro Businesses The Office of Gas and Electricity Markets (OFGEM) defines a micro business as a company that meets any one of the following criteria: Has fewer than ten employees with a turnover of not more than €2 million, uses less than 100,000 kWh of electricity per year or uses no more than 293,000 kWh of gas per year. Micro businesses can benefit from their size in a number of ways. For example, Ofgem regulations state that energy suppliers must take steps to ensure that businesses understand their contract, must give companies 30 days notice of a contract renewal deadline and cannot change a fixed-term contract, even if a micro business grows larger in that time. Furthermore, micro businesses can only be back billed (for underpaid energy) up to 12 months, can make use of a complaints procedure through the Energy Ombudsman and only have to pay 5% VAT if they use less than 33kWh of electricity or 145kWh of gas per day. ECA understands regulations relevant to micro businesses and works with them to reduce costs and increase efficiencies. Knowing the Difference Energy that is provided to business and domestic properties is essentially the same, other than the contracts - and therefore the quotes vary. Suppliers of energy work to a criteria for business customers and charge different prices accordingly. VAT is higher for business energy, terms of contracts are longer, there is not a cooling-off period and the whole quoting process is more complicated, due to the level of information required. However, the unit price is normally lower due to economies of scale - the larger the business and the more energy required, the cheaper the rate will be - which means businesses can negotiate on price and are offered tailored rates, something that is not available for domestic customers. 3) QUOTES VARY! Differentiating the Costs The unit price may be cheaper for business customers, but other factors like the ones listed below also effect overall costs. Location CONTRACT Contract Length Business Type Payment Method Credit Score Due to the higher volumes of energy required, prices will usually be higher for business customers than domestic customers. Understanding Tariff Types Fixed Tariff 3. Fixed tariffs have a fixed unit price, usually based on the wholesale cost at the time. This is unlike domestic contracts, which are based on the wholesale cost of energy bought in advance, many suppliers only purchase the energy when a commercial contract has been agreed. On average, terms range from one to five years. Variable Rate Tariff 3. Variable rate tariffs have no such guarantee, which means the unit price can fluctuate throughout the term of the contract based on wholesale fluctuations. This means that while the cost of energy can sometimes go down, it can also go up - and that energy bills could change month-to-month even if your usage remains constant. There are other types of tariff reserved for those whose contract comes to an end but do not arrange a new one - and they are normally prohibitively expensive. Deemed rates and rollover tariffs are two examples and they can result in price increases of as much as 50%. ECA Business Energy provide independent electricity, gas and water advice and procurement for business throughout the UK. For more details about their business energy services please visit www.ecabusinessenergy.com ECA Business Energy еса business energy ECA House 1 Dronfield Court buy better, use less Civic Centre Dronfield S18 1NQ T 01246 290 490 W ecaBusinessEnergy.com