No matter what type of business you run, you’ll no doubt need it to keep the lights on and power your vital equipment.
Yet these days, it can feel like you’re paying more and more for your basic utilities… and that you have no other option but to keep paying a higher price. Well here at Tariff.com, we’re here to tell you that you don’t have to put up with it.
In the energy sector, knowledge is power. That’s why ensuring you understand your business electricity bills is the first step towards taking control of your energy spending. So, if your electricity bills might as well be written in French, this is certainly the article for you.
When you get an electricity bill, you may be tempted to simply look at the final cost at the bottom. Of course, this is only natural because that’s the figure you need to pay. But did you know that the energy you use only accounts for about 40% of your overall bill? This is what’s called the commodity cost. So, what makes up the other 60%?
When looking at your energy bill, there are two charges you should definitely look out for and those are:
To get the best deal on both these charges, your business may need to shop around, as well as consider different tariff options such as fixed and variable contracts.
Figuring out what type of tariff is the best option for your business can be difficult. It’ll depend on the type of business you run, as well as the size, working hours and energy use- a myriad of factors. So, what’s the difference between the two?
Fixed Contract
With a fixed contract, your rate per kilowatt-hour is locked in for a specified time frame (normally a year). This means that the price of your electricity won’t go up and down throughout the year. Although fixed-rate contracts aren’t always the cheapest, they can help businesses budget better and ensure there are no nasty surprises in your energy bills. Yet if the price of electricity dips below the fixed price, you could end up overpaying.
Variable Contract
With variable contracts, your rate per kilowatt-hour will change depending on the market conditions, meaning it could go up or down throughout your contract. These types of contracts tend to be more flexible, often with no cancellation fees if you want to switch tariffs or providers.
We all know the ‘bill shock’ we can get from opening an unexpectedly high bill. For business owners, this fluctuation can pose a real challenge, especially when trying to allocate spending for budgets. There could be many reasons why your energy bills increase from time to time, even if you use a similar amount of energy every month. Like most costs, the price we pay for electricity is largely determined by supply and demand, which, in turn, is affected by things like weather, seasons, world events etc.
If you’ve been with your current supplier for a few years now, switching your energy supplier is one of the easiest ways to save your business money. Although energy providers put considerable effort into attracting new business, existing customers seldom get the best deal. Sadly, loyalty is rarely rewarded in the energy market, so you often end up paying more than you should for energy. So why stick with a provider that doesn’t offer you the best price? It’s time to shop around and move on.
At Tariff, we’ve made a firm commitment to helping businesses of all sizes and industries go net-zero ahead of the Government’s 2050 target. As one of the UK’s leading energy switch providers, we’re in the ideal position to prepare your business for the future.
Whether you’re uncertain of how net-zero policies will impact your business, or you’re seeking a more affordable solution for your business’ green energy needs, we’ll provide a bespoke package that covers everything from finding the right provider, to organising all the paperwork, to finalising that switch over.
Get in touch today to find out more about how Tariff can help your business begin its green journey.
