The gas supply for your business can be one of the most expensive utility costs you’re incurring each month. If so, you’re probably thinking about ways to cut down the cost of your business gas. Thankfully, saving on business gas costs doesn’t mean you have to shut off the heat in the dead of winter.
Today, we’ll compare different business gas suppliers to see how they stack up in price and service. There are a huge number of different providers out there, large and small, so it’s extremely important to do a detailed price comparison when shopping around for a business gas provider. Depending on the size of your business and how much gas you use, you may be able to find a better deal than the one you have with your current provider.
In addition, we’ll cover some of the ways that you can get a cheaper business gas plan, either with your current provider or with a new provider.
Compare Business Gas Suppliers
The first step in determining whether you should try to lower your pricing with your current provider or shop around for a new provider is to compare the standard prices offered by the main business gas suppliers. Note that most suppliers have two prices: the standing charge, which is billed every day your gas is on no matter how much gas you use, and a unit cost, which is billed per kWh of gas that your business actually uses.
In the table below, we’ve collected the standing and unit charges offered by 15different business gas suppliers:
|Supplier||Unit Charge (per kWh used)||Standing Charge (per day)|
While these prices are representative of the plans offered by each of these companies for 2019, prices can vary depending on the location of your business and the total amount of gas your business uses. In addition, these prices are based on deemed rates, which only apply to companies that have no contract with a gas supplier and so are likely to be the highest rates you will find.
How to Get a Cheaper Business Gas Plan?
The best way to reduce your business gas costs, regardless of your provider, is to switch from a flexible tariff to a fixed tariff.
Under a flexible tariff, the price of your gas varies with the fluctuations in the market price. That means that you’ll pay less when the market price of gas drops, and pay more when supply declines or demand increases. This comes with some risk not just for you, but also for your gas provider – especially because you can leave a flexible tariff plan at any time with no penalties. As a result, nearly all business gas providers charge more for flexible tariff plans.
Fixed tariff plans can be as much as much as 60% cheaper than flexible tariff plans. With a fixed plan, your business signs onto a contract, typically ranging from one to five years in length, that specifies the standing charge and price per kWh that you’ll pay for gas over that period – no matter if the price of gas goes up or down. This type of plan is favored by business gas providers because it locks you in as a customer for a specific period, even if there is some risk that you will be charged less than the market price for gas if the price increases.
The other important thing you can do to get a cheaper business gas plan is to switch from a major gas supplier to a smaller, independent company that operates in your area. Typically, smaller companies are able to offer better deals, especially on fixed tariff plans, than the more entrenched gas companies. For example, you’ll notice from the table above that British Gas, the gas behemoth, charges the highest prices, while lesser-known Bulb is extremely affordable.
Other Factors Affecting the Cost of Business Gas
There are a number of other factors that can help to lower or contribute to the cost of your gas.
First, bundled plans, in which you sign a contract to get your gas and electricity from a single provider, offer impressive savings on business gas. Of course, being able to take advantage of these savings requires that you are able to get out of your current electricity contract, or to take your gas business to that same provider. Also note that many smaller business gas providers don’t provide electricity, so bundling may not be an option with these suppliers.
The amount of gas you use obviously affects the amount you’ll be paying for gas given that every supplier includes a unit charge per kWh. However, if your business uses a lot of gas, you might be able to negotiate a discount on that unit charge. For this to work, you’ll need to have an idea of how much gas your business expects to use over the course of your contract and ask for discount offers from your potential suppliers.
Watch out for rollover contracts, which are somewhat nefarious and are an important reason to read the fine print of your business gas contract. With rollover contracts, when the term of your current gas contract ends, your business will automatically be enrolled in a more expensive plan or contract. Be sure to get in touch with your gas provider ahead of the end of your contract to negotiate the best rates going forward.
Another thing to keep an eye out for are maintenance and care plans, which some business gas suppliers offer as optional add-ons to your gas contract. These plans aren’t necessarily a bad thing, but prices can be inflated compared to what it would cost to deal with any issues using a third-party service. Just be sure to do your research rather than automatically opt-in to these plans.
Is Business Gas Cheaper than Domestic?
Business gas can be significantly cheaper than domestic gas because there are somewhat different rules governing the business vs. domestic gas markets. In the domestic gas market, for example, there are almost no contracts longer than a month, and pricing is almost always variable. That means that domestic gas plans can’t offer the inexpensive long-term fixed contracts that are among the best ways to save money on gas your business.
In addition, there is much more room to negotiate on pricing in the business gas market because it is much more competitive than the domestic gas market, and a single business is likely to be a larger customer than a single residence.
Note, though, that there are some downsides to opting for business gas that can push up the price. For example, business gas is subjected to 20% VAT whereas domestic gas plans only face a 5% VAT. In addition, businesses are required to pay the Climate Change Levy, whereas residences are not.
How Much is Business Gas?
The total cost of gas for your business will depend in the end on how much gas your business is using. Very small businesses that have low gas usage rates, between 5,000 and 15,000 kWh per year, will likely pay around 5p per kWh after considering both standing and unit charges and fixed tariffs.
The price per kWh drops as your business scales, although the total cost increases. For example, for businesses using between 15,000 and 30,000 kWh per year, 4.5p per kWh is an average rate. And for large businesses using over 30,000 kWh per year, the rate may fall as low as 4.3p per kWh.
What are Business Gas Cards?
You may also be able to save money by signing up for a business gas card, which is a credit card sponsored by one of the large gas companies. These are typically only available from the major business gas suppliers, and offer small discounts of several percent on your business gas when you pay using the card.
5 Things to Note Before Getting a Commercial Gas Quote
There are five important things to take note of before shopping around for quotes from different gas suppliers for your business:
- Your Meter Point Reference Number (MPRN). This is the unique number assigned to your business’s gas meter, which potential suppliers can use to see where your business is located and whether they can deliver gas to that point.
- Your annual gas usage. Finding out how much gas you’ve used each year might require looking back through your account statements. But if your business uses a lot of gas, having this total usage can allow you to negotiate better rates with a potential provider.
- When your business is most likely to use gas. If your business is using gas during times when residences and other businesses aren’t, supply is likely to be high and demand low, pushing down market prices. Again, you can use this information to negotiate better rates for your business.
- Your business’s electricity usage. This is important to note if you’re interested in signing on to a bundled plan. Just like with gas, you may be able to negotiate better rates if your business uses more electricity.
- Your contract expiration date. Any potential supplier will want to know when your current contract ends, so they know when you might start drawing gas from them. If you don’t currently have a contract, don’t worry about this information.