Business gas rates and prices
If your business premises has a gas supply, being aware of how much you are paying for your gas can be helpful if you’re looking to get a better deal to cut the cost of your bills.
The key is to understand the costs that are included in your bills – and what they mean. Remember that if you do consume both electricity and gas at your premises, they will each be supplied on separate contracts, so you’ll need to think about each separately if you are looking to reduce your overall spend.
What is included in my gas bill?
Several costs make up your gas bill. The majority of these costs are based on your usage and include a standing charge and a unit rate. The standing charge is the daily cost you pay your business gas supplier for transporting gas to you, and can include charges for meter reading and repairing the network infrastructure. Typically, the larger your business the smaller your standing charge, although this may vary depending on your location.
The unit rate is the price you pay for every kilowatt hour (kWh) of energy you use. While the rates decrease as your energy consumption increases, larger businesses typically have a higher average annual gas bill since they will be consuming more energy. Read our guide on typical business gas and electricity prices.
Other notable costs incorporated into your bill include the government-imposed Climate Change Levy (CCL) and VAT. The latter is charged on all goods and services while the former is designed to encourage businesses to reduce their carbon emissions and increase their energy efficiency. If you consume less than 145kWh of gas every day, your CCL charge can be reduced, along with the percentage of VAT you need to pay.
Business gas standing charge and unit rates
Below are the typical standing charges and unit rates you can expect for your business:
Microbusiness (5,000-15,000kWh per year).
- Unit rate: 4p per kWh.
- Standing charge: 32p per day.
- Average annual bill: £516.
Small business (15,000-30,000kWh per year).
- Unit rate: 3.8p per kWh.
- Standing charge: 30p per day.
- Average annual bill: £965.
Medium-sized business (30,000-65,000kWh per year).
- Unit rate: 3.5p per kWh.
- Standing charge: 28p per day.
- Average annual bill: £1,502.
Why am I paying high business gas rates and prices?
The prices offered in a business gas quote are acquisition rates – that is, those you can expect to be offered when you switch to a new supplier – so you may well be paying higher prices for your business gas. There are two main reasons why you might be paying over the odds for your business gas:
- Deemed rates:
If you’ve recently moved into a new business premises but didn’t sign up with an energy supplier, the supplier that provided energy to the previous occupant will most likely continue to supply energy to the premises. To do so, they will usually put you on “deemed” rates. These are considerably more expensive than the rates that same supplier may offer to a new customer. Deemed rates are priced this way to make up for the financial risk suppliers take when they supply energy to a customer who they know little about –they have no record of their credit history or what the business does.
- Out of contract rates:
If your contract has recently expired, but you did not arrange a new contract, your supplier will automatically put you on out of contract (also known as standard) rates, which tend to be more expensive than contractual rates. In such cases you will have the opportunity to switch to a better deal – typically after a 30 day notice period.
Switching gas suppliers
If you’re looking to cut the amount you’re spending on your gas bill you might consider switching suppliers when your current contract is approaching its end date. It is important to compare prices and rates across a variety of suppliers, to ensure you’re getting a fair deal for your gas – and as close as possible to the prices listed above.
Whether you’re planning to switch independently or decide to go down the simpler route and enlist the help of a broker, it is recommended that you start searching at least six months before your current contract is due to expire. This helps ensure quotes from potential suppliers are as accurate as possible. You can also make sure the quotes are accurate by providing your prospective suppliers with your latest energy usage figures.
Prices above correct as of May 2015.