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Understanding the Types of Business Energy Tariffs
When it comes to running a business, one of the most important aspects to consider is energy costs and how to get the most out of your energy usage. With the various types of business energy tariffs available, it’s important to understand the different types and which ones may be best suited for your business. With the right business energy tariff, you may be able to reduce your energy costs, which can help to increase your bottom line. In this blog post, we’ll be exploring the different types of business energy tariffs, how they differ, and which may be the best for your unique business needs. We’ll also look at ways to assess which energy tariff is the best for you, and how to make the switch if needed. Understanding the types of business energy tariffs is a key part of making sure you’re getting the best deal available for your needs and budget.
What types of business energy tariffs are there? Read on to find out.
1. Fixed Price Tariff
A fixed price tariff is a type of business energy tariff wherein the cost of energy remains the same for a fixed period of time (usually 12 months). This type of tariff is beneficial for businesses that have predictable energy consumption, as the fixed rate ensures that the energy cost does not change for the duration of the contract. This makes budgeting and forecasting much easier, as companies can be certain of their energy costs for the duration of the contract. It is important to note, however, that fixed price tariffs may be more expensive than other types of tariffs when the cost of energy rises.
2. Variable Price Tariff
A Variable Price Tariff is a type of business energy tariff that allows you to pay different prices for different amounts of energy used. This type of tariff is beneficial for businesses that have unpredictable energy needs or require flexibility in their energy usage. By using a Variable Price Tariff, you can adjust your energy usage according to the varying prices, ensuring that your business is only paying for the energy it needs when it needs it. This can help to reduce costs and make your business more energy efficient.
3. Economy 7 Business Energy Tariffs
The Economy 7 Tariff is a type of electricity tariff that allows businesses to pay a different cost for their electricity depending on the time of the day they use it. The cost of electricity is split into two different ‘time-of-use’ periods, one for the day and one for the night. The day rate is higher than the night rate, so businesses can save money by using more electricity during the night when the rate is cheaper. This type of tariff is particularly useful for businesses that require a lot of electricity during the night, such as those that run night shifts or have a lot of equipment that needs to be turned on overnight.
4. Peak and Off-Peak Tariff
A Peak and Off-Peak tariff is a two-rate tariff that offers two different rates for electricity or gas, depending on when it is used. This type of tariff is usually used by businesses that require a lot of energy during a specific period of peak demand. This tariff is beneficial as it allows businesses to take advantage of lower rates during off-peak times. Peak and Off-Peak tariffs usually consist of a weekday peak rate and a non-weekday off-peak rate. It is important to note that there are usually restrictions on when the off-peak rate is available, so it is important to read the terms and conditions of this type of tariff carefully.
5. Green Business Energy Tariff
A green tariff is an energy tariff that is sourced from 100% renewable energy sources such as
wind or solar. This is an important option for businesses that are looking to reduce their carbon footprint and environmental impact. When it comes to green energy tariffs, businesses should keep in mind that they can be slightly more expensive than traditional tariffs, but the long-term savings from using renewable energy can make up for it. Additionally, using green energy can help businesses minimize their emissions, making them more attractive to potential customers who are looking for green businesses to support.
6. Prepayment Tariff
The Prepayment Tariff is a type of business energy tariff that requires customers to pay for electricity and gas in advance. This type of tariff is often used by businesses that have poor credit rating or have difficulty managing their cash flow. This tariff requires customers to pay for their energy consumption before it is used, either through a pre-payment card or a direct debit payment. Customers must pay for their energy consumption in full before they can use it, and any unused money will be refunded. The Prepayment Tariff is beneficial for businesses that need to manage their cash flow, as they can pay for their energy usage in advance and avoid large bills.
7. Dual Fuel Tariff
A Dual Fuel Tariff is a type of business energy tariff that combines electricity and gas services into one package. It is typically offered by energy companies as a way to simplify the energy billing process, as it reduces the number of bills a business has to keep track of. Dual Fuel Tariffs may also offer the potential to save money through discounted rates, depending on the provider. It is important to take the time to compare different Dual Fuel Tariffs to ensure you are getting the best deal for your business.
8. Time of Use Business Energy Tariffs
A Time of Use Tariff (TOU) is a type of electricity tariff that charges different rates depending on when electricity is used. This type of tariff is usually best suited to businesses that can adjust their usage to take advantage of lower off-peak rates. This type of tariff has two distinct periods, peak and off-peak, which are different rates for each. Peak rates will be higher than off-peak rates, as electricity is considered more expensive during peak periods. Peak times are generally during the day, while off-peak periods are generally during the night. With this type of tariff, businesses can save money by shifting their electricity usage to the off-peak period.
Ultimately, understanding the various business energy tariffs available is an essential part of selecting the right energy plan for your business. As the energy market is constantly evolving, it is important to review the terms and conditions of each tariff to ensure it meets your needs and budget. Conducting an energy audit and getting advice from energy consultants may also help you identify the best energy tariff for your company.