Is the cheapest business energy deal always the best one?

Unit rate is only part of the price

Business quotes combine a unit rate (pence per kWh), a daily standing charge, taxes and levies, and sometimes broker commission. Which deal is cheapest depends on how much you use.

Worked example

Two illustrative electricity quotes:

	Deal A	Deal B
Unit rate	25.0p/kWh	26.5p/kWh
Standing charge	100p/day	60p/day

• At 12,000 kWh a year: A = 12,000 × £0.25 + 365 × £1.00 = £3,000 + £365 = £3,365. B = 12,000 × £0.265 + 365 × £0.60 = £3,180 + £219 = £3,399. A is cheaper by £34.
• At 8,000 kWh a year: A = £2,000 + £365 = £2,365. B = £2,120 + £219 = £2,339. B is cheaper by £26.

Same two deals, different winner. Use our cost calculator with your own figures.

What else to look at

• Broker costs. A broker's commission can be built into the rates. Since October 2024 it must be shown in the contract's Principal Terms for all non-domestic customers. Read how commission works.
• Fixed or pass-through. A low quote may leave non-commodity charges to change later. See pass-through vs fixed charges.
• Contract length and exit terms. A long contract at a low rate may cost more than a shorter one if prices fall; see fixed vs flexible.
• Renewal and rollover. Note the notice window and what happens at the end; see renewals.
• Security deposits, payment terms and credit checks.
• Service. Billing accuracy and complaint handling matter, but we know of no official ranking of business supplier service; ask how complaints are handled. The Energy Ombudsman covers disputes for micro and small businesses.

Check the Principal Terms

Ofgem rules require suppliers to bring the Principal Terms (the key terms such as price, length and termination charges) to your attention before you agree and confirm them in writing. Layouts vary between suppliers. Look there for price, term, end date, exit fee and broker costs, then go through our contract checklist.

There is no Ofgem price cap on business energy and no cooling-off period once you agree a contract, so check before you commit.

A simple scoring approach

List your quotes side by side and mark each on total annual cost, contract length, exit terms, broker cost shown in Principal Terms, deposit required and notice window. The cheapest total with acceptable terms usually beats the lowest unit rate with a sting in the small print. If two quotes are within a few percent, let the terms and service decide, and remember that any gap in unit rate matters less if your usage is very low.

Next steps

1. Gather 12 months of usage.
2. Calculate total annual cost for each quote.
3. Compare terms, not just price.
4. See choosing a supplier.

Biz Energy is independent and not affiliated with any supplier, broker or comparison site, and takes no commission. This is general information, not legal, tax or financial advice.