What is the difference between Commercial and Domestic Energy?

By February 1, 2018Commercial Energy

The energy powering your business during the day is the same energy heating your home at night, yet energy suppliers treat commercial and residential contracts differently. But what’s the difference and why would your organisation benefit from a business energy contract?

Business Domestic Energy Contracts Difference Power Solutions

Contract Term:

Usually, domestic energy contracts are on a rolling term with no definitive end date. This means that residential customers can switch their supplier at any time, however, the unit rate can fluctuate month on month. There are rare instances when fixed term contracts are offered in domestic settings, but these contracts are generally easy to get out of for a nominal cancellation fee.

Business contracts are almost always on a fixed term, usually a 1 – 5 year contract. The unit rate will stay constant at the agreed price, even if the market price increases or decreases. Business customers don’t have the option to cancel their contract early, unless they vacate the premises – voiding their current contract. Rolling contracts do appear for business customers but these are usually much higher rates. Fixed term contracts mean it is essential to compare business energy prices to obtain the best fixed rate.  Utilinet can compare over 20 business energy suppliers for your contract in order to help you decide on the best provider.

Price:

Residential contract rates are often higher than business contract rates and tend not to reflect market movements as much as commercial energy. Prices in the commercial market can fluctuate drastically, therefore, it is important for an organisation to ensure they are locked into a fixed price business contract to avoid these fluctuations. Using an energy consultant to negotiate a contract can be a great help if you don’t know the energy market well. Energy consultants, such as Utilinet, not only know how to negotiate the best deal with numerous suppliers, they also know when to negotiate a deal based on market trends.

Business and domestic energy bills differ further in regards to other charges and levies such as VAT and Climate Change Levy (CCL). Although business energy comes at a cheaper price, business customers pay 20% VAT compared to the 5% that domestic customers pay. CCL is a green tax applicable to businesses only as commercial usage is much higher than residential. Organisations may be eligible for reduced VAT and CCL based on reduced usage and low CO2 emissions. A good consultant should be able to help you figure out whether you are eligible for this.

Meter Type:

Businesses will likely have a much larger consumption compared to households, so suppliers monitor energy usage differently. Electricity meters have a unique meter profile corresponding to the first two digits of their meter reference number, this will affect how your meter is read by the supplier. Business meter profiles will always be 03, 04 or 00, while domestic profiles will be 01 or 02. Your meter type will determine what contract types are available to you. This may sound confusing and overwhelming but speaking to an energy consultant makes it easy to ensure you have the correct meter type and contract for your business needs.

Business Energy Comparison at Power Solutions

Why Should You Have a Business Contract?

As a business, you should be operating at your optimum level. However, paying too much for gas and electricity could be stopping this. By making sure you’re locked in to a low-price contract you can protect yourself from uncertain price rises, and ensuring you have the correct meter type will make sure you’re not paying for energy that you’re not using. Why not speak to us for a free, no obligation quote and see how we can help with your business energy solutions.