Business electricity prices can fluctuate significantly due to various factors. However, you have the ability to lower your bills by focusing on the standing charge and price per kWh. Understanding these terms and knowing what constitutes a good rate is key to saving your business money on electricity.

Standing Charge

The standing charge is a fixed cost you pay simply for having an electricity supply, similar to the line rental for your home phone. This fee remains constant regardless of how much or how little electricity you use.

The standing charge typically covers the cost of power lines, meter maintenance, and meter readings. It is billed daily in pence, with the average standing charge for UK businesses around 23p per day, though it can range from 10p to 33p daily.

Why Do Standing Charges Vary So Much?

The variation in standing charges largely depends on your electricity usage. Generally, if you pay a lower standing charge, you’ll pay more per kWh of electricity, and vice versa. For businesses with low electricity usage, it might be more cost-effective to opt for a lower standing charge even if it means paying a higher rate per kWh.

What About Zero or No-Standing Charge Contracts?

Zero-standing charge contracts mean you only pay for the electricity you use, without a daily fee for access to the supply. While this might seem appealing, it’s usually only beneficial if your electricity usage is very low. For example, if your business operates seasonally and is closed for a significant portion of the year, a zero-standing charge contract could save you money. However, be aware that these contracts typically come with higher per kWh rates.

Price per Kilowatt Hour (kWh)

A kWh is a measure of energy; for instance, a 1000-watt drill uses 1 kWh of energy in an hour. The price per kWh, often referred to as the unit rate, is what you pay for each unit of electricity consumed, and this can vary widely, typically between 10p and 30p.

Why Do kWh Prices Vary So Much?

Several factors influence kWh prices, including your location, as some suppliers charge different rates depending on proximity to power plants or the availability of energy infrastructure. Other factors include your payment method and the tariff you’re on.

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