Managing a Business from home - Is a Business Energy Contract Right for You?

Can I get a business energy contract when working at home?

To qualify for a business energy tariff, you must be registered officially as a business or have business rates documents or other proof that your company exists. You must also be able to prove that a high proportion, (usually 50% or more), of your energy use is for commercial purposes. This may sound like a lot. However, the lighting, heating, and electricity to run your office equipment will most likely equate to at least 50%. You can measure how much energy is used in your home for your business by taking meter readings at the beginning and end of your work day, then working out what chunk of your energy bills is used for your business. Appliances running regardless of your business location, such as a freezer or fridge, would not be included in this.

Can I get a business energy contract when working from home if I’m a sole trader?

If you’re a sole trader and work from home there is still a chance you can benefit from a business energy contract. If you are classed as a microbusiness, you will also receive more protection from energy suppliers than if you were a larger business. If you manage your business from home as a sole trader, you should contact us or request a quick quote to see how much we can save you on your energy bills.

Should you get a business energy deal whilst working from home?

If multiple people in your household work from home, your energy consumption will be much higher than if you worked from commercial properties. Running a business requires energy to power computers, laptops, extra screens, lighting, and cooking/drinking equipment (kettle/coffee machine), which leads to higher energy bills. If this is the case, you should switch your energy supply from domestic to business. Business energy contracts come with some great benefits! Businesses get special access to a wider range of suppliers, who bring cheaper unit rates and standing charges.

Businesses can access longer fixed contracts, which means your prices are secure for longer and you will avoid price inflation for as long as your contract is signed for. You can use our inflation calculator to see how much you could save if you were to fix your rates for longer.

There are however some downsides to consider. If you do decide to sign a fixed term contract, there are usually early exit fees or cancellation fees associated. Business energy contracts are often cheaper because once your energy contract is agreed, the supplier will then buy your estimated annual usage in bulk. This then means if you were to exit your fixed contract early, the supplier is then left having to resell this energy, often at a loss. So to cover their backs, suppliers charge early exit fees or cancellation fees.

There is no price cap on commercial energy contracts, meaning that if you find yourself out-of-contract, prices are much higher than domestic out of contract rates. But don't worry, if you agree to a contract with Purely Energy, we’ll let you know when it’s nearing the end and contact you to see if you want renewal quotes, so you won’t find yourself having to pay high out-of-contract rates. 

Is business energy cheaper than domestic energy?

When considering unit rates, business energy is more often cheaper than domestic energy. The bigger the business, the bigger the consumption, the bigger the discount. However, businesses also have to pay CCL and higher VAT. On domestic energy contracts VAT is only 5%, but on business energy contracts it is 20%. However, if your business meets certain criteria then you can still pay the discounted  5% VAT and be CCL exempt on your business energy bills.

What will happen to my energy deal if my workplace is empty?

If your business premises are empty, you will still be billed unless your contract has no standing charge. This is because your energy bills are made up of two separate charges.

Unit charge: The price you pay for the energy you consume, measured in kWh.

Standing Charge: A charge to cover the cost of transporting energy to your premises and maintaining the national grid. This is charged daily regardless of whether you consume any energy or not. 

This means you will still be charged for unoccupied premises through the standing charge, even if you aren’t consuming any energy. If the premises will be unoccupied for an extended period, it may be worth switching to a contract with a low/no-standing charge. Usually with low/no standing charge contracts, the unit rates are higher than usual so before deciding you should arrange a call with one of our energy experts and we will be able to advise you on what type of contract will be most cost-effective for your business premises.

How can Purely Energy help?

Have you noticed an increase in your energy bills since working from home? If you have any queries about managing your business from home or would like help lowering your energy costs, contact us at 0161 521 3400 or email us at Info@purelyenergy.co.uk. Alternatively, get a quick quote.

This Article was written by Megan Glover of Purely Energy. If there are any suggestions or questions - Please get in touch with us.