Energy Tariff Analysis
Pre 1998, when the small business energy markets deregulated and were opened up to competition, there was no real choice for consumers.
Electricity consumers were supplied by their local ‘board’ (here in Rayleigh, our local board was EEB – Eastern Electricity Board).
Gas was supplied nationally by British Gas.
These suppliers provided a set of tariffs, and as a business user, you were constrained to one of these tariffs, depending on your meter type (e.g. single rate, day/night rate, etc.).
Only larger business consumers were allowed to contract their energy with other suppliers.
- 1990 – Market Opened for Largest 1 MW+ Consumers
- 1994 – Market Opened for 100 kW+ Customers
- 1998 – Market Opened for small business + domestic consumers
So, from 1998, all businesses have been able to look outside their incumbent suppliers – and select from a range of other national suppliers, some long established players alongside innovative new ‘challenger’ suppliers.
These energy suppliers have established a range of tariffs and pricing models to attract new business customers.
SME tariffs are bundled costs, and will consist of a daily standing charge alongside one of the typical rate structures below:
- Single Rate (same price for all units consumed).
- Dual Rate (separate prices for units consumed during day and night).
- Day/Night/Evening & Weekend (separate prices for units consumed during day, night and over the off peak evenings and weekends).
- Seasonal (separate prices for units consumed at different times of the day and across winter/summer).
Tariff structures for small & medium businesses are generally static, as they are applied to large numbers of similar consumers, so suppliers billing systems treat them as set tariff structures. However, the rate prices can be flexible and negotiated, within the structure of the tariff itself.
To select the right tariff, it’s more than just picking what looks like the cheapest one. The true cost of a tariff will be determined by your usage patterns – how you will consume energy over the coming year may be a better marker for which structure you will need going forwards.
To illustrate, consider a manufacturing business that is looking to extend their working patterns to perform heavy operations overnight. They may benefit more from switching to a day/night tariff to take advantage of cheaper energy between midnight and 7am. Understanding the business and where it is going over the coming year is key to picking the right product.
In addition, procuring energy as a business user is different from procurement as a domestic user. The laws which govern business and consumer contracts are different (Unfair Contract Terms Act 1977 for businesses, and the Consumer Rights Act 2015 for private individuals).
It’s important to understand the differences and to recognise the protections in place and the contracting process.
Significant savings are available to those businesses willing to manage their energy costs correctly.
How we can help
Belbridge Energy have a deep understanding of the UK energy markets, and are able to work across a wide range of energy suppliers to collate their offerings and help determine which is best for you.
This takes into account the amount of energy you use, how you use it, how you interact with your supplier when there is a problem and any other support you may require.
We understand the complexities of tariff pricing and the supplier switching process, along with the common pitfalls that don’t often get discovered until you receive your initial bills.
Let our experts guide you through the process, explaining everything as we go, removing industry jargon and making the process simple to follow. Once you’ve seen the different options available, and how much money you can save, along with the additional things your supplier is able to provide you with – we promise you won’t look back.