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How do commercial energy contracts work?


Energy is measured in units. For electricity, we use kilowatt-hours, abbreviated “kWh”. The amount you pay for electricity, your “rate,” will be the amount of money you pay per kWh.

Standing charge

This is the amount charged each day, regardless of the amount of electricity used, to help maintain the national grid and the cost of transporting energy to your home from the source.

Fixed rate

A certain amount is charged, per unit used, for the duration of your contract. This amount (per unit) does not change over the term, though your bill will still vary depending on the amount of electricity you use.

Variable rate

The amount charged per unit goes up or down in response to the cost of wholesale electricity. As wholesale rates fall, your prices will get better; if wholesale prices rise, your electricity will get more expensive per unit.

Deemed rate

In the absence of a contract, a company can still buy electricity, but it will be more expensive than it would be within a contract deal, and changes each month with the rise and fall of the market.

28-day rate

A contract for companies that haven’t switched since the deregulation of the energy market.


If your current contract has ended, but you haven’t yet set up a new one, you will be charged a rollover rate. This is usually among the most expensive rates the company offers, and should only be taken on if you are not likely to commit to a new contract, but need power for a short period.


What is the difference between domestic and business energy deals?

Businesses generally use a great deal more energy than households do, and they usually do so much more during business hours, then drop off over the night – unless of course, it is a bar or other business that is busier in off-peak hours. Their usage habits also vary much more widely than most domestic buildings. That combination of bulk use and unique needs means that the few different deals available for residential users aren’t flexible enough to serve business customers.


How to compare business energy deals

The quick answer is to check for your options, and choose the one that best suits your situation. To make your decision, you’ll want to have the details of past energy use, ideally for a full year to get an idea of seasonal changes. Once you are ready to talk to providers, be sure to know your business’s registration information, the date your current contract closes (if available, find out what your switching window dates are). You should also have on hand a recent energy bill and the MPAN and MPRN numbers (from your bill or meter).


Armed with comparison quotes and all of the necessary information, you will be ready to get that deal that keeps energy costs down and your profits up.

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