When it comes to both business and domestic energy, there may be a few differences but there is a common need that both should be looked after to reduce bills. Thus, will ultimately not only save money but also help lower the consumption of energy usage. It is important to get a supplier that offers a reasonable tariff. Now, if both business and domestic energy customers make use of the same electricity and gas, then what are the differences between the two?
Differentiating Between the Two
Supply Contracts
While the energy flowing through your home and business might seem the same to a large scale, the very nature of both of its contracts are different. If we look at domestic energy, the supply contracts tend to be open-ended. Some consumers might switch to a fixed term contract which also has the possibility of being terminated at an early stage. Unfortunately, with such a contract, you have to pay an added fee.
On the contrary to domestic energy contracts, business energy contracts are only fixed-term contracts which vary from one to three years. These are a bit more permanent as they do not offer an opportunity for termination of the contract. The cost of the overall supply will apply in accordance with the term relevant to the contract without added wholesale price fluctuations.
Price Fluctuations
When it comes to changes in price domestic rate usually remain at a constant, while business energy rates will change from time to time. Business rates can change either every few months or in some cases, daily. The biggest factor affecting these price fluctuations are wholesale price fluctuations.
If ever you consider signing up to a business energy supplier, you must be cautious of the market and make sure you understand it carefully. Even waiting a while, while monitoring the market, could be the difference between a much higher or much lower price.
VAT
While it might sound like a lot, business energy contracts could charge you a VAT of up to 20%. This is not the case for domestic energy contracts as they only require a VAT of 5%. To make that 20% rate even worse, business energy contracts also require you to pay a climate change levy annually. This is only applicable when business consumption levels fall below a certain level.
The Correct Meter
There is also a difference when it comes to measuring energy supplies for domestic and energy use. With domestic energy, it's extremely easy to change from supplier to supplier, but business energy is a lot more complex. This is usually due to the fact that you'll have to consult the broker before choosing a contract, especially if it's a long-term energy supply commitment.
