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Navigating Energy Costs: Choosing the Right Tariff for Your Business

Understanding the intricacies of energy tariffs can be a daunting task for any business owner, especially in today's fluctuating energy market. A key question often arises: Is it more cost-effective to opt for a higher unit rate with a lower standing charge, or the other way around? In this post, we delve into how your business's energy usage plays a crucial role in this decision.


Businesswoman calculating energy costs, pondering over a bill with a calculator in a modern office setting, with text overlay 'Lower Unit Rates or Lower Standing Charges? Making the Smart Choice for Your Business' and the Smart Energy Company logo at the bottom


Understanding Energy Tariffs

Before delving into specifics, it's essential to understand what we mean by 'unit rate' and 'standing charge'. The unit rate is the cost per unit of energy (measured in kWh) that your business consumes. The standing charge is a fixed daily amount, covering the costs of keeping your business connected to the energy network. Together, they make up your energy bill.


The Rising Trend of Standing Charges

In light of our analysis, it's crucial to understand the recent trends in standing charges. As detailed in our previous post "Standing Charges: Why Are They Increasing?", there are several reasons behind the rise in standing charges. Key factors include:

  • Infrastructure Upgrades: Investments in energy infrastructure to ensure reliability and sustainability.

  • Regulatory Changes: Adjustments in response to government policies and regulatory frameworks.

  • Market Dynamics: Fluctuations in the energy market affecting the operational costs of energy suppliers.


This upward trend in standing charges makes it even more important for businesses to carefully consider their tariff choices, as these fixed costs become a larger part of the overall energy bill.


Case Study: A Comparative Analysis

To illustrate how different tariffs impact your costs, let's examine some real numbers for a quote for a client on 14/12/2023:

Unit Rate (p/kWh)

Standing Charge (p/day)

Annual Usage (kWh)

Annual Cost (£)

Note

21.129

201.09

15,000

3,903.33


22.90

60.82

15,000

3,656.99

Lower SC is Cheaper

21.129

201.09

25,000

6,016.23


22.90

60.82

30,000

5,946.99

Lower SC is Cheaper

21.129

201.09

100,000

21,862.98

Lower UR is Cheaper

22.90

60.82

100,000

23,121.99


This table shows varying combinations of unit rates and standing charges against different levels of energy usage. Notice how the cost-effectiveness changes depending on the amount of energy consumed.


Customised Solutions for Varied Needs

Every business has unique energy needs. A manufacturing plant may have a consistent high energy usage throughout the year, while a seasonal business might see peak usage only at certain times. Therefore, a one-size-fits-all approach to energy tariffs doesn't work.


Why Your Usage Pattern Matters

From the data, it's clear that businesses with lower energy consumption can benefit more from a higher unit rate coupled with a lower standing charge. Conversely, if your business is a heavy energy user, a tariff with a higher standing charge but lower unit rate might be more economical.


Seeking Professional Guidance

Understanding your specific energy usage pattern is key to selecting the right tariff. This is where professional advice becomes invaluable. Our team at The Smart Energy Company specialises in analysing your energy needs and recommending the most cost-effective tariff options.


Call to Action

Don't let the complexity of energy tariffs hinder your business's potential for savings. Contact us today for a tailored energy quote that aligns with your unique usage patterns and helps maximise your savings.


Conclusion

Choosing the right energy tariff is more than just looking at the numbers; it's about understanding your business's specific energy needs. With the right guidance and a tailored approach, you can optimise your energy costs and invest more in what truly matters - growing your business.

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Have More Questions?

  • Is it possible to change multiple business utilities at the same time?
    Our switching service allows you to switch multiple utilities simultaneously. We have successfully assisted multiple businesses in the UK by helping them save on various services such as energy and water with savings within 2023 already over the £2 Million mark.
  • How much can I save on my business utility bills?
    The amount you can save on your business utility bills will depend on various factors such as your current usage, the rates offered by different providers, and the specific deals available in your location. However, our switching service is designed to help you find the best deals and save as much as possible. By comparing multiple suppliers and negotiating competitive rates, we aim to maximise your potential savings. Get in touch with us to discuss your specific needs and get personalised information on potential cost savings for your business utility bills.
  • How does switching business utilities work?
    Switching business utilities involves a straightforward process. Here's a general overview of how it works: Evaluation: Start by assessing your current utility bills and usage patterns. This will give you an idea of your current costs and help identify areas where savings can be made. Comparison: Use a switching service like ours to compare different utility providers in your area. We provide you with quotes from multiple suppliers, allowing you to compare prices, contract terms, and services offered. Selection: Based on the comparison results, choose the utility provider that best meets your needs and budget. Consider factors such as price, customer reviews, contract terms, and any additional services or benefits offered. Contract Negotiation: Once you've chosen a new provider, our team can help negotiate the contract terms and rates on your behalf. Switching Process: The switching service will coordinate the transition with your current supplier and the new provider. This may involve submitting termination notices, arranging meter readings, and scheduling the activation of new services. Enjoy the Savings: After the switch, you'll start receiving services from your new provider, typically at the agreed-upon rates. You will notice savings on your utility bills, providing you with cost advantages for your business. Remember, the exact process may vary depending on the type of utility you are switching, but our switching service aims to simplify the process and assist you at every step.
  • Who are the cheapest business utility providers?
    As market conditions and prices fluctuate regularly, it's challenging to provide an up-to-date and definitive list of the cheapest business utility providers. The prices we provide you are valid and available on the day of the quote and will provide most current and competitive deals available. Our switching service helps you compare prices and offers from multiple suppliers, ensuring you have the most accurate and relevant information to make an informed decision about your business utility provider.
  • What is energy procurement?
    Energy procurement is the process of sourcing, negotiating, and securing energy contracts to meet the specific needs of a business. It involves analysing energy consumption patterns, understanding market trends, and negotiating with suppliers to obtain the best possible rates and contract terms.
  • Why is energy procurement important for my business?
    Energy procurement ensures that your business secures energy contracts that are both cost-effective and aligned with your operational needs. Proper energy procurement can lead to significant cost savings, budget predictability, and reduced risks associated with volatile energy markets.
  • How does The Smart Energy Company help with energy procurement?
    We specialise in analysing your energy consumption, understanding your specific needs, and leveraging our relationships with over 20 suppliers to negotiate the best possible contracts on your behalf. Our team ensures you get optimal rates, flexible terms, and contracts that align with your business goals.
  • How do you ensure I get the best energy rates?
    Our team continuously monitors the energy market, staying updated with trends, price fluctuations, and supplier offerings. Coupled with our in-depth analysis of your energy needs and consumption patterns, we negotiate with suppliers to secure rates that are both competitive and suited to your business.
  • Are there any hidden fees associated with your energy procurement services?
    Transparency is a core value at The Smart Energy Company. We provide a clear breakdown of any commission we earn as a company when you come to agree any new energy contract. This is typically included as an uplift in your unit rate and paid to us by the supplier you chose to go to. Our primary goal is to secure the best energy deals for you, with no hidden costs.
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Very helpful, quick expert advice. We have been using Smart Energy for a while.

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Ian Hughes

Operation Manager

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