Commercial energy: How much should it really cost?

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It’s a bit of an open secret that a number of small businesses are paying far above average for their gas and electricity.

Sometimes it’s because your business is simply using more energy than others in your sector. Other times it’s because you haven’t renewed your contract. 

More often than not though, it’s because the vast majority of businesses have no clue how much their commercial energy should cost and so they unfortunately go on paying more for their energy than they should be.

At Wildfire Energy, we hate the idea of any business paying more than they have to for their gas and electricity, and it’s our mission to help businesses like yours save on their energy costs.

So, if you’re not sure whether you’re paying extortionate prices, or you’re simply curious about whether your competitors are paying less for their utilities, this post is for you.

Before we get into how much your business energy should cost, we first need to understand why business energy costs tend to differ from business to business.

It starts with how much energy your business consumes

If you have a look at your bill, you’ll notice that there are a few charges that are combined to give you the final energy cost.

The first one is your standing charge which we won’t explore in too much detail in this post, but in short, it’s a fixed daily cost that you pay to your supplier for the energy they provide for you.

The second, and more important charge (at least for this particular topic) is:

Your cost per unit of energy (or CPU)

In other words, how much you pay per unit of gas or electricity your business uses.

For most small businesses, the amount you pay changes month on month depending on how much energy your business uses. Spending usually increases during the winter months because of the shorter days and the frustrating futility of trying to wear several layers and still basically freezing.

Your cost per unit and the standing charge vary from supplier to supplier, meaning that even if you use less electricity you can still end up shelling out more, or you’re on a tariff that has an above average CPU.

That being said, there are ways you can reduce your commercial energy costs, even if you’re a long way from the end of your contract, which we’ll explain in more detail in a couple of paragraphs.

With that out of the way, let’s discuss the average cost of commercial energy

The average cost of commercial energy is calculated according to the size of your business. You’ll likely fall into one of three categories. If you’re a larger business, then it’s a whole different kettle of fish. Give us a call, and we’ll help you find an energy deal that suits your business needs.

Microbusinesses:

Gas

On average, microbusinesses:

  • Consume: 5,000-15,000 kwh of gas
  • Pay a unit price of: 4.0p per kwh
  • Pay a daily standing charge of: 32.0p
  • Giving microbusinesses an average cost of *drumroll please*: £516 per year.

Electricity

On average, microbusinesses:

  • Consume: 5,000-15000 kWh of electricity
  • Pay a unit price of:  13.2-14.5 pence per kWh
  • Pay a daily standing charge of: 27.4 pence
  • Giving microbusinesses an average cost of: £650-1800 per year

Small businesses

Gas

On average, small businesses:

  • Consume: 15,000- 30,000 kWh per year
  • Pay a unit cost of: 3.8p per kWh
  • Pay a daily standing charge of: 30.2 pence
  • Giving small businesses an average cost of: £965 per year

Electricity

On average, small businesses:

  • Consume: 15,00-30,000 kWh of electricity per year
  • Pay a unit price of:  12.4-14.1 pence per kWh
  • Pay a daily standing charge of:  23-27 pence
  • Giving small businesses an average cost of:  £1,900-2,900 per year.

Medium sized businesses

Gas

On an average year, medium-sized businesses:

  • Consume: 30,000-50,000 kWh of gas
  • Pay a unit price of:  3.5 pence per kWh
  • Pay a daily standing charge of:  28.0 pence
  • Giving medium-sized businesses an average cost of: £1,502 per year

Electricity

In an average year, medium-sized businesses:

  • Consume: 30,000-50,000 kWh of electricity
  • Pay a unit price of:  12.2-13.3 pence per kWh
  • Pay a daily standing charge of:  23-27 pence
  • Giving medium sized an average cost of: £3,300-5,000 per year

Remember:  these numbers are based on industry averages, and how much you pay will depend on a number of factors, most pertinently, how much energy your business consumes (see above). Still, if these numbers above made your jaw drop in disbelief because you’ve just discovered that the cost of your business energy is so far above average that it’s basically in ‘space’, keep reading; we have a few tips to help you bring those costs back down to earth.

First up: Switching energy suppliers

 

If you’ve been with your supplier for a few years and your contract hasn’t changed then it’s highly likely that you’re on a deemed or ‘rollover’ contact, which, put simply, means you’re paying more than you should for your business energy.

If that sounds like you, then finding a better deal with a different energy supplier is your best bet.

Like the many business clients who are fed up of searching for energy deals online, you’re probably full of frustration because you’ve already tried switching to another supplier online, but it’s been less fruitful than trying to track down loo roll paper during lockdown.

Luckily, there’s an easier way to switch energy suppliers and none of them involve you punching numbers into a calculator. Leave that to us by getting in touch, and we’ll help you reduce your business energy costs by up to 40%.

If you’re not ready to switch yet or you’re still tethered to your contract, don’t fret. You can still reduce your commercial energy costs.

How?

By reducing how much energy you consume

As we mentioned before, one of the major factors that affect your business energy costs, is the amount of energy your business consumes. If your business uses a lot of energy then the first step would be to get a business energy audit, to find out exactly what you can do to reduce the energy you consume and in turn lower your bill.

In the meantime, making smaller changes such using more energy efficient equipment and paying closer to light switches and power outlets can over time really make a difference.

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