It has never been more important to manage the costs of business gas with rapidly increasing prices. Many companies are reluctant to switch business gas suppliers due to the admin involved – but it has never been easier.
Power Compare offers a full switching service to ensure that transition to your new business gas supplier is easy and efficient. You may even find that we can negotiate a great deal with your current business gas supplier. Managing your gas bills can free up hundreds of pounds each year.
Looking for great business gas rates? Compare business gas prices with us to see how much you can save. We also have the latest data on how much an average UK business pays per kWh on their business gas bills, this is broken down in detail below.
Who Is The Cheapest Business Gas Supplier?
Business gas prices change daily. The best way to view live business gas rates is to use our comparison engine.
Here, we’ve provided a breakdown of the current prices from a selection of business gas suppliers. These are accurate prices as of 24th May 2022 based on usage of 25,000 kWh annually – so the prices you see here may be different to live rates should you compare business gas prices today.
|Supplier||Price per kWh||Standing Charge||Annual Cost|
Business Gas Price Comparison By Business Size
The table below reflects the average price paid per kWh by businesses of various sizes (based on consumption levels). It includes the prices with and without Climate Change Levy (CCL) of 0.203 p/kWh, but excludes VAT.
|Business Size||Business Gas Unit Price (excluding CCL) (p/kWh)||Business Gas Unit Price (including CCL) (p/kWh)|
available from GOV.UK.
- Very Small – Under 278,000 kWh per year.
- Small – 278,000 – 2,777,000 kWh per year.
- Medium – 2,778,000 – 27,777,000 kWh per year.
- Large – 27,778,000 – 277,777,000 kWh per year.
- Very Large – 277,778,000 – 1,111,112,000 kWh per year.
To put those numbers in perspective, a ‘Large’ business using 277,777,000 kWh of gas per year would end up paying £9 million more for gas if it paid the price paid by the average very small business (5.174 p/kWh) vs the average large business (1.886 p/kWh).
Business Gas Price Trends UK
Below you can see how gas rates with and without CCL have changed over the past decade.
Business Gas Prices Without Climate Change Levy
Business Gas Prices Including Climate Change Levy
What Is CCL?
Climate Change Levy (CCL) is a tax charge based on how much energy businesses use. This environmental tax was introduced to encourage businesses to become more energy efficient.
Small Business vs Micro Business
According to Ofgem a non-domestic consumer is defined as a micro business if they meet one of the following criteria:
- employs fewer than 10 employees (or their full-time equivalent) and has an annual turnover or balance sheet no greater than €2 million; or
- uses no more than 100,000 kWh of electricity per year; or
- uses no more than 293,000 kWh of gas per year.
The main benefit of being defined as a micro-business rather than a small business is that you can give a termination notice at any time during your contract which means you can always shop for the best deal. Typically, it is much easier to manage your business energy if you’re a micro business. This is because they usually have similar flexibility to domestic contracts. Ready to compare business gas deals?
Gas Unit Cost vs Standing Charge
The price of business gas is made up of two things. The unit price and standing charge. It’s important to understand the difference when you compare business gas suppliers.
Unit Price: This is how much you pay for the gas you use. It is charged in terms of pence per kWh. It is a variable charge, so the more you use, the more you pay. To get an idea of how much you should be paying, please see the tables at the top of this article.
Standing Charge: The standing charge is a fixed cost. Normally it’s charged as a fixed price per day (although sometimes per month or quarter). The difference with the unit price is that you pay the same amount regardless of how much or little gas you use.
And unlike unit prices, standing charges vary widely from supplier to supplier sometimes as low as 30p per day all the way up to £85+ per day.
Generally speaking, most price comparisons should focus on the unit price rather than the standing charge as this will determine the bulk of what you’ll pay. However, if you do see an abnormally low unit rate it’s worth your while to double-check the standing charge.
Tariffs For Different Business Gas Meters
Unlike electricity, business gas meters are pretty simple. You’ll either have a standard one or one capable of automatic meter readings. Basically, if you’re a small gas customer (up to 732,000 kWh depending on supplier), you’ll have a standard meter, but if you use a lot of gas you’ll be asked/required to choose an AMR or similar smart meter.
Overall, the type of meter does not really affect the price you pay. Instead, the price you pay and the meter you use are determined by your overall usage level.
Deemed & Out-of-Contract Gas Prices Explained
Business gas customers do not currently benefit from Ofgem’s price cap. This means customers not under contract can end up paying a lot more for their gas than those under contract. It’s important to regularly compare business gas tariffs to ensure your business is in the best position to save money.
It is actually quite difficult to end up in this situation as most suppliers will at least try to roll you over onto a variable rate contract when it expires. Regardless, keeping an eye on your contract end date for your business gas will place all the control in your hands.
Deemed rates: are what businesses taking over new premises will pay until they enter into a gas supply contract. The amount is paid to the existing energy supplier of the premises until a contract can be arranged with them or another supplier.
The prices are very high but are never meant to be paid for long. Just be aware the deemed unit prices can easily be 200%+ more than in-contract rates, so there’s a big incentive to switch quickly.
Out-of-contract rates: The amount charged is usually very similar to deemed rates but usually arises when a contract ends and a new contract has not been put in place. The problem with out-of-contract rates is that you may not realise you’re on them unless you’re checking your bill regularly.
Once again if you find yourself paying out-of-contract rates, you should either contact your supplier to be placed under contract or better yet compare prices to get a much better deal.
You can sometimes save up to 70% off the rates you’re paying.
British Gas Deemed Rate Example
To get an idea of just how much these rates can be, let’s have a quick look at British Gas‘ Deemed Rates.
|Customer Type||Unit Rate (p/kWh)||Standing Charge (p/day)|
|Small Non-Daily Meter||15.45p||363.08p|
|Large Non-Daily Meter||15.12p||1,725.59p|
Business Gas Contracts: Fixed vs Variable
While both fixed and variable gas contracts are available, most suppliers steer customers towards fixed-price contracts unless they are very sophisticated buyers. Finding a business energy deal that works for you will help you save money on your gas and electricity.
Here are the key things you need to know about both types:
Fixed Tariff Business Gas Contracts:
- Can now be for as long as 5 years, although 1-3 years is more typical
- Fixes your unit price paid per kWh and standing charge for the duration of the contract (but usually excludes changes to CCL)
- The price you pay per unit may increases with contract length because of the risk of price increases
- Fixed price often only applies to estimated usage, which means you could pay more if you start using more energy
- Very difficult to get out of the contract early
Variable Tariff Business Gas Contracts:
- The price you pay varies based on wholesale gas prices and can go up or down
- Cheaper than deemed or out-of-contract rates
- Not usually locked into a long term contract, so can switch suppliers at any time
- Offers far less certainty than a fixed-term contract in terms of rates
- Prices can sometimes be higher than fixed-term contracts
Most small businesses will probably be better going with a fixed price contract as it offers peace of mind and is one less thing to worry about.
Business Wholesale Gas Prices Per kWh 2022
- Lower gas storage levels in Europe
- Reduced pipeline imports from Russia
Combined together, this has led to higher prices to attract more gas to meet demand.
Generally speaking, business gas prices tend to track pretty closely to the wholesale cost. This means in the short-term, gas prices look set to increase slightly from where they are today.
Other Costs For Commercial Gas Contracts
While the wholesale price of gas makes up the bulk of what your business will pay. There are a few other costs to be aware of.
- VAT: Most businesses will pay the standard VAT rate of 20% for their commercial gas. However, if at least 60% of your business’ energy is used for domestic purposes, you are a charity or non-profit, and/or you use less than 145 kWh of gas per day (4,500 kWh per month) you may be able to pay only 5%.
- CCL: From 1 April 2019 the Climate Change Levy is 0.339 p/kWh for gas.
- Local Distribution Zone (LDZ) charges: Levied by Gas Distribution Network (GDN) operators in order to recover their regulated allowed revenue as determined through the RIIO-GD1 network price control.
Who Is The UKs Cheapest Commercial Gas Supplier?
Unfortunately, there’s no single “cheapest” business gas supplier. Comparing business energy is the best way to keep track of the cheapest supplier. The best business gas deal will regularly change.
Although, it is important to note that each company has different types of customers it likes to deal with and will price accordingly. Finding a business energy supplier that specialises in the business gas tariff you are looking for will provide the best value.
You can use a service such as Love Energy Savings to help you compare suppliers that are right for you. You can start the process to switch business gas within minutes. Plus, they are one of the only sites that allow you to buy your business gas online.
Brokers & Gas Prices
Energy brokers remain the most popular way for businesses to engage in the energy market. And for good reason. There are dozens of gas suppliers out there, so finding the best deal can be tricky if not impossible.
However, it’s important to understand how brokers make money, especially since most don’t charge an upfront fee. Basically, energy companies will work with brokers to attract new customers. They may offer them special rates to encourage people to switch.
What brokers will then do is offer this rate to their customers, plus a small per kWh price uplift. The amount will vary from broker to broker, but can be quite high if dealing with an unscrupulous one.
Here’s a hypothetical example: British Gas runs a promo offering brokers a deal on the gas of just 2 p/kWh. The broker will then offer a deal to you at 2.2 p/kWh. They pay British Gas the 2 p/kWh and then keep the 0.2 p/kWh as their profit.
While the broker market is extremely competitive, there is still the possibility of paying too much.
That’s why we recommend Love Energy Savings since their focus is on recurring business (86% of businesses use them again). They focus on much more than finding you the best business gas deal, they are also rated highly for their customer service. Especially when dealing with business energy.
You can of course also approach the suppliers themselves. However, you may not be able to get a better deal. Business energy retailers, such as Love Energy Savings, have commercial partnerships in place to provide exclusive deals to customers. On top of finding the best business gas deal for your business, they’ll also take care of all the admin. This means you can get back to doing what you do best, whilst another company deals with your business energy switch.
How To Get Cheaper Gas For Your Business
- The single best way to get the lowest price is to compare suppliers. Services such as Love Energy Savings make this process easy and they even allow you to buy online.
- Know how much gas you use each year and when, as this makes comparisons easier and may make it easier to negotiate a discount.
- Have your MPRN (Meter point reference number) ready as this can also help you make a better comparison.
- Consider how you pay your bill. For example, suppliers like EON and EDF may offer up to a 7% discount if you pay by monthly direct debit.
- Check your company credit rating. Bad credit can mean you’ll pay more for your gas supply.
- Look into when you use your gas. For example, if your business is seasonal you may be able to benefit from lower summer prices.
- If you have multiple business locations you may be able to negotiate a lower unit price by buying in bulk.
- Energy suppliers don’t offer dual fuel contracts or discounts like they do for domestic customers. This means you may find it cheaper to buy your gas and electricity from separate suppliers.
- Look into installing better insulation in your property. Most gas is used for heating, which means you could reduce your consumption and bills simply by wasting less.
- Look into how efficient your gas boiler is. Older boilers can be real energy hogs, which means upgrading to a brand new one can pay off more quickly than you’d think.
Business Gas FAQs
How long does it take to switch business energy suppliers?
Once you have secured a better business gas deal, the switching process usually takes about 4 to 6 weeks. This allows your old supplier to produce a final bill and get your business gas supply switched over.
What is green business gas?
When you compare business gas prices, some suppliers may offer you a green gas tariff. This is a more environmentally friendly way to power your business premises.
How much VAT will I pay on my business gas?
20% VAT is charged on top of your business gas rates. If you operate a charity or a not-for-profit, you could be eligible for VAT reduction. You can speak to your expert business gas team for advice if you think you are eligible for a VAT reduction.
Why is business gas more expensive than household gas?
Home energy users pay less VAT. This means that UK households have smaller energy costs. The amount business customers pay also depends on the usage and size of the business premises.
Larger companies with more purchasing power may be offered the best business gas prices as they will be buying in bulk. This largely depends on business gas providers and current wholesale commercial gas prices. It is always better to get a business gas quote to ensure you’re getting the best deal before starting the switching process.