Most natural gas users are well aware of their domestic contracts, using them for business purposes are always challenging. There is some core difference between domestic energy and business energy which every user should know before proceeding with commercial use of natural gas.
Is business energy cheaper than domestic energy?
While comparing business energy with domestic energy, several factors need to be taken into consideration. For domestic use and business use, the gas flows down using the same sources and cables. Still, there is a considerable difference between their contracts.
Depending on the number of factors, the prices between commercial and household energy varies. If a business is striving to choose the best energy supplier, platforms like Utility Bidder helps in making a thorough comparison of pricing from different suppliers.
Average domestic energy rates Vs Average business energy rates
Domestic energy rates seem to be cheaper than business energy rates as the businesses pay a lower price per unit. This is due to economies of scale and large volumes a business seeks for natural gas leading to lower rates per unit.
Most of the businesses consume a high amount of natural gas to place them in a better position to negotiate basis on their larger consumption schedules.
Compared to any household, businesses have higher consumption levels.
Depending on their needs and preferences, commercial clients can negotiate and achieve flexible contracts that are specifically tailored for businesses. But domestic users do not get such flexibility to negotiate.
What are the pricing criteria for gas consumption?
Depending on geographical location and payment method, household users get generic pricing.
The pricing for business use depends on the following factors:
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- Payment method
- Business type
- Geographical location
- Credit score
- Demand profile
- Contract length
How to assess if business energy is cheaper than domestic energy?
Here are some of the significant factors which you need to take into account to assess if business energy is cheaper than domestic energy:
Price fluctuations
The price fluctuations are more obvious to commercial users than domestic users. Most businesses have an annual contract that is revised in terms of pricing every year. As the business owners take the advantage of troughs and peaks in the market, their flexible energy contract alters with each change in the market price.
Domestic users are less likely to face frequent price fluctuations. Any hike in pricing is usually on an annual basis.
VAT
While the business consumer pays VAT @ 20%, the household users require paying @5%. It makes a considerable difference in the pricing, leading to final prices on the higher side as compared to the household users.
Other Levis
Climate Change Levy is the additional charge which every business needs to pay on the use of natural gas which is otherwise not applicable for the home use of natural gas.
Hence, the final cost to the businesses for natural gas inflates with the addition of additional taxes and levies.Although the business electricity supplier offers competitive rates, the businesses end up paying higher costs than households.
Read More:
Renewable energy for business – here’s what you need to know
