How Business Electricity Rates Are Determined

If you take a look at the business electricity rates being charged by electricity suppliers and compare them to the rates they charge residents, you will see quite a difference. You might be surprised at how much more business has to pay, but no matter which electricity supplier you examine, you will find that to be the case.

Business electricity rates can be quite high, but yours do not necessarily have to be. There are ways to find lower rates than the average, and you can save lots of money by comparing rates and suppliers to find the best one.

The Two Charges

Every business electric bill is based on two separate charges. There is a standing charge which is measured per day and a per unit charge, which is measured per hour or half hour. Let’s examine these two to determine how your electricity bill will be figured up.

The standing charge is based on a couple of different factors. They can basically be boiled down to the distance your business is from the power station, which determines how much it costs the electric company to supply power to you. As you can imagine, it takes more resources and manpower for them to transmit current to you if you are far away from their source of power than if you were nearby. There are service lines and other infrastructure components that cost them money to maintain, and all that goes into the standing charge. Essentially, the amount of work and money it takes the power company to send you electricity will determine your standing charge.

What that means for you is that even if you are a small business with a low base standing charge rate, you could still pay quite a bit for the other part of the standing charge because of where you are located.

The other part that determines your total electricity charge is the per unit charge. Generally, this will be based on the size of your business. So, the smaller businesses will pay a lower standing charge base rate than larger businesses would. There are usually three tiers of standing charge base rates- for small, medium and large businesses. If you expand your business and it enters a new tier, then you can expect to pay higher prices for the per unit charge.

This per unit charge is usually calculated every hour, but it can also be calculated every half hour if the supplier so desires. That is will cost you more, and you want to be aware of how the current is being charged so that you know what your actual costs are going to be. If the rates the electricity supplier shows you are reasonable, but they charge you every half hour, then you will end up paying more than you would for slightly higher rates charged every hour. That’s something to consider when you are trying to find reasonable business electricity rates.

Get the Best Rates

There are lots of companies out there charging their various business electricity rates. Some are going to be quite reasonable while others are less so. It’s up to you to determine which is which, and you can have some help by using a price comparison site. The best sites for comparing prices will give you multiple rates from a single search.

You should use these comparison sites whenever you are interested in finding lower rates than what you are paying. You can sign up for the lowest rate possible initially, but you can also switch to a lower rate plan even after you have signed a contract with another supplier. It will be more difficult to get the other rate plan at that point, but it’s still possible.

You can also see about renegotiating your current plan and contract. Your electricity supplier may be interested in charging you a lower rate while you agree to stay with them for a longer period of time. It’s a win-win situation that can save you money, but you won’t know if it’s possible until you get in contact with your supplier and see what you can work out. Often, showing them lower rates that you found elsewhere will be enough to get the conversation started and ensure that they at least consider lowering your rates. No matter what size your business is, you can benefit from lower rates, as they will help you see greater profits.