Fixed tariffs
A fixed tariff sets the unit rate for electricity or gas for the length of the agreed contract, usually between one and five years. The standing charge may also be fixed for the same period. This gives budget certainty because consumption costs are predictable regardless of what happens in wholesale energy markets during the term.
The trade-off is that a business locked into a fixed rate cannot benefit if wholesale prices fall significantly after the contract starts. Suppliers also build a margin into fixed rates to cover their own market risk, so fixed tariffs are not always the cheapest option at the point of signing.
Variable and flexible tariffs
Variable tariffs move up or down in line with wholesale market movements, typically reviewed monthly or quarterly. Flexible procurement contracts, more common for larger consumers, allow a business or its energy manager to purchase blocks of energy at different times to average out the price paid across a longer period.
These tariffs suit businesses that can tolerate cost fluctuation and want to capture savings when the market falls. They require closer monitoring of bills and market conditions and are generally unsuitable for a business that needs fixed cost certainty for budgeting purposes.
Deemed and out-of-contract rates
A deemed rate applies automatically when a business starts consuming energy at a site without having agreed a contract, for example after moving into new premises. An out-of-contract rate applies when an existing contract ends and no new one has been agreed, meaning the business defaults onto the supplier's standard terms.
Both rates are typically significantly higher than a negotiated contract rate, often by a wide margin, because the supplier is not competing for the business and is pricing in the flexibility a customer has to leave at any time. Businesses should agree a new contract before renewal to avoid being moved onto these rates.
Standing charges and unit rates
Every business energy bill combines a standing charge, a fixed daily fee covering network and metering costs regardless of usage, with a unit rate charged per kWh consumed. Both figures vary by region, meter type, supplier and contract terms.
| Component | What it covers | Typical range |
|---|---|---|
| Standing charge | Network, metering, admin costs | 20p to 60p per day |
| Electricity unit rate | Per kWh consumed | 20p to 32p per kWh |
| Gas unit rate | Per kWh consumed | 5p to 9p per kWh |
| Contract length | Duration of fixed terms | 1 to 5 years |
Compare business energy prices
Enter your postcode and business details to compare available commercial energy prices.
Green business energy tariffs
A green tariff means the supplier matches some or all of the business's electricity consumption with renewable energy certificates or backs the contract with power purchase agreements from renewable generators. Green gas tariffs typically use carbon offsetting rather than renewable gas supply, since renewable gas volumes remain limited.
Green tariffs do not automatically cost more than standard tariffs, and pricing depends on the supplier's sourcing arrangements and the wholesale market at the time. Businesses reporting on carbon commitments should check exactly what certification standard, such as REGO, backs the green claim.
Multi-site contracts
Businesses operating from several premises can often negotiate a single contract covering all sites, sometimes with a blended unit rate and a common renewal date. This simplifies administration and can improve negotiating leverage due to combined volume, though sites with very different consumption profiles may still be priced separately within the same agreement.
- Combined billing across all sites
- Aligned renewal dates simplify future switching
- Volume discounts possible for larger portfolios
- Individual site meters still read and billed separately
Contract terms to check
- Length of the fixed term and renewal notice period
- Whether rates include or exclude Climate Change Levy
- Early termination charges if the business needs to exit
- Whether the standing charge is fixed for the full term
- Billing frequency and payment method discounts