Running a business is not easy – you often work long hours, you have to look after your customers and employees while keeping pace with the competition. Don’t add high electricity bills to the list of things you should worry about. If you live in one of the deregulated U.S. energy markets, you can sign up for a custom-made business electricity plan to lower your overheads.
What is a Business Electricity?
A business electricity rate is a kind of energy deal offered to commercial customers who need electricity for business use. Basically, if you don’t consume electricity for personal purposes (in your household), but you need it to power your offices, commercial buildings, or machinery, you are getting business electricity.
Of course, in practical terms, business electricity is indistinguishable from residential electricity – the same cables and lines are used to deliver it. The same utility company will come to your rescue when the power goes out.
You can get a business electricity tariff if you run any of the following:
- A small, medium or large business
- A home business
- A hotel or Bed and Breakfast
- A charity
Types of Business Energy Plans
Energy plans are like shoes. One size does not fit all. The same goes for business electricity. Electric suppliers offer many different energy plans and products, each with a specific set of pros and cons.
As a business owner, your primary focus should be on running your company, not navigating through complex unfamiliar information about power rates. That’s why we prepared an overview of the main energy products:
Variable Rate Plan
With a variable-rate plan, there is no stable rate and the price you pay for a unit of electricity might be cheaper one month and more expensive the next month. The plus side for your business is that you don’t have to commit to paying the variable-rate for a fixed period of time. If you decide to exit the contract, there will be no cancellation fee.
Fixed Rate Plan
A fixed-rate plan will lock the price you pay per kWh for the duration of the contract, no matter how much the wholesale electricity price varies. These plans are often the most cost-effective option for businesses, as electricity providers offering commercial electric rates will create a customized quote specifically for your company.
However, since the contract is set for a fixed duration, exiting early will most likely result in an early cancellation fee being applied.
Commercial Electricity Rate Trend
How much do businesses pay for electricity? According to the U.S. Energy Information Administration (EIA), the national average electricity rate at the end of 2020 was 10.74 cents per kilowatt-hour. Are you paying more or less for business electricity than you did 10 years ago?
According to the same dataset from EIA, the average commercial electricity rates have been steadily rising since 2010, resulting in a cumulative increase of approximately 5.3%. That might not seem like a great leap, but a 5% increase in electric bills can impact your bottom line, especially if you are a small business.
How are business electricity rates fluctuating in respect to other sectors?
Despite the small hike, commercial electricity is not going up anywhere near as fast as residential electricity. The average U.S. household is paying 17% more for electricity today than it was 10 years ago.
Electricity for Businesses By State
The average electricity rates for commercial customers vary quite a lot.This is partially due to varying costs connected with producing energy in different states, but another part is the level of state energy deregulation. The more options business customers have to switch electric suppliers, the more they can negotiate and drive a bargain.
|State||Commercial - Average Electricity Rate (in cents / kWh)||Deregulated Commercial Electricity?|
Suppliers With Business Electricity Rates
Who are some of the suppliers offering business electricity rates?
One of North America’s largest retail energy providers, Direct Energy offers fixed-rate electric plans and other energy solutions for small, medium, and large businesses. The Choose Green Plan for 12, 24, or 36 months offers 100% renewable business electricity, online account management, and a $100 Amazon.com Gift Card for 5.54¢/kWh.
Green Mountain Energy, the longest-serving renewable energy retailer in the U.S., serving customers in Texas, Illinois, Pennsylvania, Maryland, New Jersey, New York, and Massachusetts has a 36-months, 4.35 cents / kWh plan for your small or medium business. In addition, you can sign your company up for a solar buy-back program and sell any excess electricity back to the grid for energy bill credits that you can roll-over to the next month.
Texas businesses can also sign up with Amigo Energy, a subsidiary of the energy giant Just Energy offering fixed-rate plans, suited to your circumstances, including free-electricity nights, 100% green energy, and no-deposit plans. Energy Fixed-Online – 36 for 4.54¢/kWh fixes your rate for a period of three years.
Still not found what you like? Why don’t you get in touch with one of the Electric Rate specialists on 1-888-307-9636 to help you find the best electric rate for your business?
How Energy Deregulation Impacts Businesses
Today there are 18 states with deregulated electricity and 27 states with natural gas, giving customers the power to choose their suppliers. Put simply, residents of the deregulated U.S. states don’t have to purchase electricity from the state utility company for a regulated price. Instead, they can shop around to find more competitive, convenient energy plans from retail energy providers, or REPs.
It wasn’t always the case. In the early 20th century, utility companies were bound to their regional territories meaning that your electricity provider was determined by where you lived. This system lasted in the United States until the seventies, dominated by rising energy prices and unstable supplies caused by the OPEC oil embargoes.
Today, both households and businesses get to shop for electricity rates in the deregulated states. Most retail energy providers (REPs) have special sections of the website dedicated to residential and commercial customer rates. Since the energy needs of a business are more complex than those of a household (depending on size, machinery, and other characteristics), REPs often create a customized quote for business energy for their customers.
Why is Your Business Energy Bill High?
Utility bills that are too high can cause a blow to your business – after all, it’s money that could be otherwise invested in growing your company. If you are trying to reduce your monthly usage, here are a few things to look out for.
Type of Business
Every business is different and the amount of electricity used by a small bed and breakfast won’t be the same as one operating heavy machinery. That’s why is important to get a quote from an electric supplier, that is customized for your individual situation to avoid surprises.
Generally, the bigger your business, the lower your average electricity price. Why? There are two reasons – the electricity rate offered by competitive suppliers are often tied to your average monthly usage, so the more you spend, the better the offer they can make you. Additionally, as a large business, you have more buying power and can probably negotiate down the rate quite a bit.
When and how you use electricity will have a great impact on the final bill. If you rely on electric power predominantly during peak hours, your bills will likely be high. However, if you can adjust your usage to consume power when electricity is cheaper (overnight or during the weekend, for example), you might save quite a bit. Read our guide to find out how to take advantage of free electricity plans.
Signing up for a longer fixed-rate period will generally result in a lower rate, because the electric supplier is able to buy more electricity upfront, for a better price. However, be wary that if you have to exit the contract early for whatever reason, you will likely be charged an early termination fee.
Did you know that according to the Department of National Utilities Refund, 79% of companies suffer overcharges and billing errors? Electric suppliers often don’t have the resources to double-check each monthly statement, so you bear the brunt of any overcharge.
If you think that your company has been overcharged for electricity, it might be worth hiring a utility bill auditor to find errors in your bill and help you get back-paid.
Switch Business Electricity Suppliers
Our website Electric Rate brings commercial customers the lowest electric rates with easy to read contracts. We review all contracts prior to listing offers to ensure that there are no hidden fees and the contract language is customer friendly. Our long time relationships with the Electric Providers allows us to negotiate and deliver the lowest electric rate that’s right for your business. To find business rates, select your state and utility company on our website and we will get in touch with a customized quote!
How much does the average business spend on electricity?
In the states with energy choice, business customers are able to take advantage of cheaper rates too. On average, an American business consumes approximately 6,189 kilowatt-hours of electricity per month for which it pays monthly an average price of $660.32.
Is electricity cheaper for businesses?
On average, commercial electricity rates are slightly cheaper than average residential electricity rates. According to the EIA, the average commercial rate in 2020 was 10.74 cents per kilowatt-hour while the average residential rate in the same year was 13.22 cents per kWh. However, the actual price you will pay will vary, based on your state, the type of business you run, and the electricity plan you are currently on.