In short
Business electricity is electricity supplied to commercial premises under a contract with a licensed supplier, delivered by the local network operator and measured by a meter identified by an MPAN. Prices are quoted per site, not capped, and made up of unit rates, standing charges, network and policy costs, Climate Change Levy and VAT.
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How business electricity is supplied
Several organisations sit behind every business electricity supply, but you only have a contract with one of them:
| Who | What they do | Do you choose them? |
|---|---|---|
| Supplier | Buys electricity, sells it to you, bills you and holds your contract | Yes |
| Distribution network operator (DNO) or independent network operator | Owns and runs the local cables to your premises. The first two digits of your MPAN core identify the distributor. | No, it depends on location |
| Transmission system | Carries electricity at high voltage across Great Britain to the local networks | No |
| Meter operator and data services | Install, maintain and read meters, and pass readings into the settlement system | Usually arranged by the supplier; on some half-hourly sites the customer appoints its own |
| Settlement (Elexon) | Elexon administers the Balancing and Settlement Code, the rules that match what suppliers buy with what their customers use | No |
The supplier passes the network and settlement costs on to you within its prices. That is why two sites with the same consumption can be quoted differently: location, meter type and capacity all feed into the price.
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How business electricity differs from home electricity
- No price cap. Ofgem's price cap covers households on standard variable tariffs, not business contracts.
- No cooling-off period. Once you agree a contract, by signature or verbally, it is binding.
- Negotiated contracts. Suppliers quote for your site and can choose whether to supply you, for example based on size or credit rating.
- Business size bands. Ofgem treats you as a microbusiness if you have fewer than 10 employees and turnover or balance sheet total of no more than 2 million pounds, or use up to 100,000 kWh of electricity a year. Ofgem describes a small business as one with 11 to 50 employees and turnover up to 6.5 million pounds or a balance sheet up to 5 million pounds, or using up to 200,000 kWh of electricity a year. Above that you are a large business. Some suppliers use either size or consumption to decide which protections apply.
- Extra microbusiness protections. Suppliers must give microbusinesses clear contract information and renewal price information before the contract ends, and on evergreen contracts limit termination notice to 30 days and acknowledge a request to end within 5 working days.
- Different tax treatment. Most business use pays Climate Change Levy and VAT at the standard rate, unless the use qualifies for a lower rate.
Tariff types for business electricity
Ofgem lists fixed, variable, flexible, rollover, out-of-contract and deemed contracts for business energy, and notes that suppliers may not offer all of them. You will also see pass-through and multi-rate price structures in business electricity quotes:
| Tariff | How it works | Worth considering if |
|---|---|---|
| Fixed-rate | Unit rates and standing charges fixed for the term | You want the price per kWh to stay the same whatever the wholesale market does |
| Variable-rate | Prices can rise or fall during the contract | You want the freedom to switch at any time and can accept price changes |
| Flexible (structured) | Energy bought in smaller portions over time rather than at one price | You are a large business that uses a lot of energy (Ofgem's description) |
| Pass-through | Some charges, such as certain non-energy costs, are added to the price as they become known | You are prepared for parts of the price to move during the term |
| Multi-rate (Economy 7 and similar) | One rate in a set off-peak period and another, higher rate at other times | A large share of your use falls in the off-peak period |
| Rollover, out-of-contract, deemed | What applies when a contract ends or none is agreed | Avoid where you can: Ofgem says deemed and out-of-contract rates are usually more expensive |
Each one is explained on our business energy tariffs page, with deeper guides to fixed rate business energy, flexible energy contracts, pass-through energy contracts and Economy 7 for business.
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Business electricity meters
The meter decides how your use is recorded and, for larger sites, how parts of the price are worked out.
- Standard (single-rate) meters record total use and are read manually or by the supplier.
- Two-rate meters record day and night use separately for Economy 7 and similar tariffs.
- Smart meters send readings to the supplier automatically. See smart meters for business.
- AMR meters (automatic meter reading) also send readings remotely and are common on commercial sites.
- Half-hourly meters record use in every 30-minute period. Larger supplies are half-hourly, shown by profile class 00 on the MPAN top line. See half-hourly meters explained.
Every electricity supply point has an MPAN. Our MPAN number guide explains what each part of it means and where to find it.
What makes up the price of business electricity
A business electricity quote combines energy, network, policy and tax costs. Some appear as separate lines on the bill; most are built into the unit rate or standing charge.
| Part of the price | What it is | Where it appears |
|---|---|---|
| Unit rate | Price per kWh used, including the wholesale energy cost | Bill line, per rate band |
| Standing charge | A fixed daily charge, paid whether or not you use electricity | Bill line |
| Non-commodity costs | Network charges, balancing costs and government schemes such as the Renewables Obligation, Feed-in Tariffs, Contracts for Difference and the Capacity Market | Usually inside the unit rate and standing charge; itemised on some pass-through bills |
| Capacity charge | Half-hourly sites pay a daily charge on the supply capacity agreed with the network operator, with extra charges if demand exceeds it | Bill line on half-hourly bills |
| Broker commission | If a broker is paid by the supplier, the commission is added to the unit rate and/or standing charge | Inside the rates; shown in the contract's principal terms |
| Climate Change Levy | An environmental tax charged per kWh on most business use | Bill line |
| VAT | Standard rate for business use unless the use qualifies for a lower rate | Bill line |
Read more in business energy standing charges, non-commodity costs explained, electricity capacity charges, Climate Change Levy for business and reduced rate VAT on business energy. For qualifying-use electricity in Great Britain, HMRC applies a temporary zero rate of VAT from 1 October 2026 to 30 June 2027; Northern Ireland stays at the reduced rate.
Green electricity
A green or renewable business electricity tariff matches your use with renewable generation, usually evidenced by Renewable Energy Guarantees of Origin (REGOs) issued by Ofgem. A green tariff still pays Climate Change Levy: the renewable exemption only applies to electricity generated before 1 August 2015. Our green electricity for business page explains how to check the claim.
Getting a business electricity quote
Fidelity Energy gets business electricity quotes from the suppliers it works with. To get started, gather:
- A recent electricity bill for each site
- The MPAN for each meter, and the meter type if you know it
- Your annual consumption in kWh, or twelve months of bills
- Your current contract end date and any notice terms
- For half-hourly sites, the agreed supply capacity and access to half-hourly data if you have it
Then contact us. We help you gather the details and introduce you to Fidelity Energy, and we can stay your point of contact while it handles the contract. If you need gas too, see business gas or dual fuel for business. To put offers from several suppliers side by side, our sister site covers comparing business energy.
More on business electricity
How Forever Communications helps with business gas and electricity
Forever Communications is part of Forever Group, which looks after phone systems, business mobiles and connectivity for UK organisations. For business electricity and gas, we work as an agent of Fidelity Energy, an independent business energy broker that prices your requirements with the suppliers on its panel. We are not an energy supplier, and neither is Fidelity Energy.
- Make sense of your bills: we can help you read unit rates, standing charges, meter details and the other costs on your invoices
- Like-for-like quotes: we help you gather your meter numbers, consumption and contract end dates so suppliers quote on the same basis
- The right tariff type: we can talk you through fixed, flexible and pass-through contracts, green electricity and green gas options before you decide
- Better timing: we help you plan a renewal ahead of your contract end date, or move off deemed and out-of-contract rates when you move premises
- Your choice: you decide which quote, if any, to accept; prices and terms are set by the suppliers and confirmed at quote, including the broker commission
We work with offices, shops, hospitality, landlords, manufacturers and multi-site organisations. Send us a recent bill and we can take it from there.
Frequently asked questions
What is business electricity?
Business electricity is electricity supplied to commercial premises under a business contract with a licensed supplier. It is delivered through the local network, measured by a meter with an MPAN, and priced per site rather than under the household price cap.
Is business electricity more expensive than domestic?
Not necessarily, but it is priced differently. Business use usually pays Climate Change Levy and VAT at the standard rate, prices are quoted for your site, and there is no price cap. The overall cost depends on your use, meter, location and contract.
Do I need a half-hourly meter for business electricity?
Only larger supplies are half-hourly metered. Most small business premises have a standard, two-rate, smart or AMR meter. Market-wide half-hourly settlement is moving all meters to half-hourly settlement over time, but that is about how use is settled, not a change of meter on every site.
Can I switch business electricity supplier at any time?
It depends on your contract. Ofgem says most suppliers will not let you leave a fixed-rate contract early unless you agreed a termination clause or pay an exit fee; a switching window opens a few months before the end date. On a variable-rate contract, including rolling, out-of-contract and deemed rates, you can switch at any time, though your current supplier may object if you owe it money.
What is an MPAN on a business electricity bill?
The MPAN (Meter Point Administration Number) is the unique number for your electricity supply point, usually shown in a box marked 'S' on the bill. Suppliers need it to quote and to switch your supply.
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