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Business Gas Prices – December 2023
Business gas prices in December 2023 – the table below shows average business gas prices per kWh offered on one-year fixed contracts in December 2023.
| Size | Annual Consumption kWh | 1 Year fixed gas rate p/kWh |
|---|---|---|
| Small | 10,000 to 50,000 | 9.1 |
| Medium | 50,000 to 100,000 | 8.6 |
| Large | 100,000 + | 8.4 |
Important note: The information above is based upon the latest published wholesale gas data but does not represent live gas prices. Business gas rates change daily and are location dependent. To get current business gas rates today start by entering your postcode below
Source: The above data has been compiled using:
- Wholesale natural gas future rates on the National Grid published by the ICE exchange.
- Three-month rolling average non-commodity rates offered in the commercial gas market using AquaSwitch quoting data.
Current business gas prices
Current business gas rates in the UK and their trends over the last year are shown below in our graph, updated weekly by our experts:
What is a good business gas rate?
A good business gas rate depends on several factors and is particularly influenced by the wholesale gas markets. Government energy price publications show that between 2009 and 2019, business gas rates were remarkably stable at 2p/kWh; however, current business gas rates are approximately four times higher.
Unfortunately, these low historical prices are no longer available due to the continued restriction of Russian gas supply into Europe. See the latest business gas rates.
Geopolitical events heavily influence business gas rates, and we can’t tell what the price of gas will be in the future. However, we can tell you the best business gas rates in today’s market with our business gas comparison service.
Are business gas prices falling?
Yes, business gas prices have fallen significantly in 2023. The chart above shows how business gas prices per kWh have changed over the past year.
With wholesale gas prices falling back towards normality, it’s a great time to find out what deals are available to your business. Get quotes tailored to your business today with the AquaSwitch business gas comparison service.
Average annual business gas usage in kWh
The biggest factor determining business gas prices is how much gas your business consumes. All business gas tariffs charge for each kWh of gas that flows through the gas meter at your commercial property.
As a guide, here are the annual figures for the average business gas usage:
| Business Size | Average Annual Gas Consumption (kWh) |
|---|---|
| Micro | 5,000 |
| Small Business | 15,000 |
| Medium Business | 35,000 |
| Large Business | 75,000 |
| Industrial | 500,000 |
| Average British Home | 12,000 |
Source: Statista: Business Energy Consumption UK.
Average business gas rates in the UK
Average business gas rates in the UK are shown in our table below. The data consists of one-year fixed gas rates offered by business gas suppliers in 2023 compared to the previous two years.
| Size | Annual Consumption kWh | 2021 average rates p/kWh | 2022 average rates p/kWh | 2023 average rates p/kWh |
|---|---|---|---|---|
| Small | 10,000 - 50,000 | 5.1 | 16.3 | 8.5 |
| Medium | 50,000 - 100,000 | 3.7 | 15.8 | 8.0 |
| Big | 100,000 + | 4.3 | 15.6 | 7.8 |
Source: The information above is based upon the latest wholesale gas prices published on theICE exchange and average non-commodity costs as per AquaSwitch quoting data.
You may have noticed a sharp drop in the average rates in 2023 compared to 2022. Business gas rates are currently lower than the 2023 average quoted on the table, making this an excellent time to compare business gas prices with AquaSwitch. Start by simply entering your postcode below.
Finding the best business gas rates
In the last couple of years gas prices have soared, but that doesn’t mean that you cant still save money on business gas prices. So how do you find the best business gas prices?
Below are a few tips on finding the best business gas prices:
Compare plenty of prices
Compare business gas prices from many suppliers. The more business gas prices you compare, the more of an informed decision you will make.
Submit an accurate reading
Submit your best estimate of annual gas consumption to get accurate quotes tailored to the needs of your business.
Understand your quote
Review the quotes in detail to ensure you understand the differences between suppliers before making a decision.
Business gas prices explained
Choosing the right business gas supplier and tariff is vital for business owners as it directly affects how much you need to pay on your business gas bills.
Unlike the household energy market, no price cap protects business gas rates. If your business pays a standard variable tariff, gas rates could be twice as much per kWh as the fair market price.
Business gas rates are a significant cost for most companies, so we’ve produced this ultimate guide to business gas rates and prices to give you all the information you need.
What’s included in business gas rates?
Business gas rates are the set of charges that companies pay for a business gas supplier to provide a gas supply through the mains network.
Here are the key components of simple business gas rates:
- Unit price – Gas consumption is measured in kWh. A business gas tariff will state how much is charged for each kWh of gas. This will either be a fixed rate through a contract or a variable rate that changes with market conditions.
- Daily standing charges – A typical business gas tariff will include a fixed daily cost for maintaining a connection to the local gas distribution network. The standing charge is calculated in pence per day.
- Climate change levy – A fixed government tax on businesses to encourage efficient gas usage. The CCL is charged to all non-micro businesses for each kWh of gas used.
- Value-added tax – Business gas rates are taxable under UK VAT laws. Microbusinesses pay VAT at 5%, whereas all other businesses pay at the standard rate of 20% on top of all three charge elements above.
How much is business gas per kWh?
The cost of 1 kWh of business gas varies depending on several factors, including the supplier, location, tariff, and state of the wholesale gas market.
In the last year, the market’s cost of 1 kWh of business gas has ranged from 8 to 25 pence.
Find out the current business gas rates available for your business.
Why are micro business gas prices higher?
The government’s quarterly publication of energy prices consistently shows that micro businesses pay higher gas prices per kWh than larger businesses.
Ofgem, the regulator, recognised this in May 2019, stating that “The complexity of the market with its wide variety of contracts and lack of accessible information about prices means some microbusinesses find it hard and costly to engage in the market to find a better deal.”
As well as less purchasing power, microbusinesses typically lose out by not searching for competitive business gas prices. Small business owners have a million things to think about, and often basic utilities fall to the bottom of that list.
See if your micro business can benefit from a simple switch, compare business gas today.
Source: Ofgem strategic review of the microbusiness retail market.
Do large businesses get better commercial gas prices per kWh?
Yes, large businesses typically enjoy cheaper commercial gas prices compared with SMEs and other smaller companies.
This is partially a matter of purchasing power. As with any goods bought in bulk, the more you buy, the cheaper prices you get. Large businesses receive bespoke business energy quotes when looking for a new gas tariff reflecting lower ‘bulk buy’ prices.
Secondly, large businesses are likely to have a procurement team that focuses on getting the best prices on the goods they purchase, including utilities. Large companies don’t typically fall into the traps of expensive rollover tariffs or out-of-contract gas rates.
Business gas prices calculator
Understanding your business gas bill can be complicated. On the final page of your bill, your supplier will give you a ‘details of charges’ section showing how each element of your business gas rates has been calculated.
To help demonstrate how business gas rates work, our in-house experts have built a handy business gas rates calculator below.
How do you calculate business gas rates?
The biggest confusion in business gas rates is that suppliers charge per kWh of gas used by your gas meter measures gas volume, in either cubic meters or feet.
Our business gas prices calculator aims to cut through this confusion by calculating the conversion between your meter readings and kWh. Here’s how it works:
Metric meter gas consumption calculation:
- kWh = Difference in gas meter reading (m³) * Volume correction factor * Calorific value ÷ Conversion factor
Imperial meter gas consumption calculation:
- kWh = Difference in gas meter reading (ft³) * Conversion factor to cubic metres * Volume correction factor * Calorific value ÷ Conversion factor
Where:
- The volume correction factor is an industry figure to account for atmospheric pressure, typically around ~1.02.
- Calorific value adjusts for changes in the composition of gas when burned. It can vary slightly per supplier. Typically, ~39.2 MJ/m³ is considered a reasonable estimate.
- The conversion factor is used to convert from joules to kWh, which is 3.6.
- The conversion factor to change from ft³ into m³ is ~0.028.
What are the different business gas tariffs?
Business gas tariffs come in many shapes and sizes, and business gas suppliers have a few different terminologies describing them.
A business gas tariff is a business energy contract that determines how your business gas rates are calculated. Here we explain the options when choosing a business gas tariff:
Fixed rate business gas tariff
This is the most popular gas tariff for businesses. Gas suppliers will offer this tariff over 1-3 years, where the unit rate per kWh of gas supplied is fixed at an agreed price per kWh.
Business energy bills will vary depending on the amount of gas you use, but the actual unit cost and the business energy standing charge will stay at the agreed fixed price. Having these costs fixed allows your business to plan, knowing how much you will spend per kilowatt hour.
Fixed rate tariffs offer you protection from fluctuating gas prices. This is especially important given the recent rises and falls in the wholesale gas markets.
Variable rate business gas tariff
The unit cost per kWh will change according to market conditions in a variable rate tariff.
Business gas suppliers typically use the variable gas tariff as their deemed contract.
So, if you’ve just moved into a new property or you’ve reached the end of your current contract without making alternative arrangements, you’ll start paying this variable rate tariff.
In a variable rate business gas tariff, you’ll benefit from falling wholesale gas prices, but if prices go up, you’ll pay more.
Extended business gas tariff
An extended tariff is given when you extend your current contract with your business gas supplier. If you’re happy with your existing business gas prices and customer service, then it’s worth considering an extended tariff, as you will likely be rewarded for your loyalty.
However, there will probably be lower business gas rates from other suppliers, so it’s worth comparing to see the value of your current deal.
Pass-Through Tariff
The pass-through tariff is a gas tariff that allows you to split your bill between a fixed wholesale charge and other associated charges (for example, the National Grid and Transmission Network use of system) that change over time.
The variable charges passed onto your business could increase over time but are potentially offset by the fixed wholesale price agreed.
Unlike a fixed tariff, pass-through tariffs leave your business vulnerable to changes in the underlying gas distribution costs.
Flexible approach business gas tariff
The flexible approach tariff allows you to buy your gas in advance. By purchasing your gas in bulk, you know how much you’ve already paid for it when it comes to using it.
By bulk buying your gas, you benefit from buying when the wholesale prices of gas drop. This approach only benefits larger businesses that can afford a large deposit to secure the current wholesale gas prices.
Is it better to have fixed or variable rates for your business gas supply?
It entirely depends on your circumstance. Typically, most businesses opt for a fixed rate business gas prices as that allows them to lock in their rates and forecast accurately.
Variable prices can offer a lower rate to start, but there’s no stability, and costs change frequently. In an unstable energy market, you can pay more than if you opted for a fixed rate tariff.
You don’t have to pay exit fees in a variable business gas tariff, and you don’t have an “end date” – you’re free to switch whenever and quickly. If you find a better deal elsewhere, you can switch rapidly.
Variable business gas prices are a risk, and if you’re risk-averse, you should stick with a fixed-rate business gas tariff and know precisely how much you will be paying on your business gas rates per kWh.
Business gas prices and the government discount
During the recent energy crisis, business gas rates available to companies were three or four times higher than usual. To protect businesses, the government offered an automatic discount through the Energy Bill Relief Scheme, but on the 1st of April 2023, this support ended.
A new but much less generous scheme now provides an automatic discount of 0.8p/kWh on business gas rates, but only if the wholesale gas price on your tariff exceeds 10.7p/kWh.
The new scheme is called the Energy Bill Discount Scheme and will apply until March 2024.
With the less generous discounts available from the government, ensuring you have a competitive tariff is more important than ever.
Compare business gas prices today to see if your current fixed-rate business gas prices are competitive compared to the latest rates offered by our panel of business gas suppliers.
Compare business gas today to see if your current fixed-rate business gas prices are competitive compared to the latest rates offered by our panel of business gas suppliers.
Business Gas Prices – FAQs
Our business gas experts answer all the common questions on business gas rates.
How long does it take to get cheaper business gas rates?
If you’re transferring between business gas tariffs with your current supplier, the process can take just a few hours and is just a matter of paperwork.
However, if you’re switching to a new supplier, it can take a little longer. Switching business gas suppliers typically takes around 4-6 weeks to complete.
Here’s a general guide to the switching process and how long each step may take:
Compare business gas: Start by comparing the gas prices available from various suppliers to get the best deal. (you can use the AquaSwitch business gas comparison tool for this!). The time this takes depends on how much research you need to do and how quickly you decide.
Submit your application: Once you’ve chosen a new business gas supplier, you’ll need to submit an application to switch to their tariff. This typically takes around 1-2 weeks to process.
Transfer process: The transfer process typically takes around 2-3 weeks to complete, but this all happens in the background between your old and new suppliers.
To avoid expensive out-of-contract gas rates, it’s important to arrange to switch business gas tariffs in advance of your contract end date. Switching to a new business gas tariff can be arranged up to a year in advance.
Why is business gas so expensive?
In the last twelve months, natural gas prices have skyrocketed. Our customers frequently ask us why gas is now so expensive. Here’s a summary of events that got us here:
- North Sea natural gas production has gradually declined, making Britain dependent on importing gas from Europe.
- In February 2022, Russia invaded Ukraine. The UK and the rest of Europe enacted economic sanctions against Russia to support Ukraine.
- In response, Russia has gradually cut off the gas it typically supplies to Europe. In August 2022, Nord Stream, Europe’s largest gas pipeline from Russia, was reduced to just 20% of its usual capacity.
- In Europe, there is not enough gas to go around, so prices across the continent have skyrocketed.
AquaSwitch founder Ben Brading says, “There is significant uncertainty in the market about whether there will be sufficient supplies of gas in Europe this winter, causing gas prices to be highly volatile.”
Want to know more? Check out our complete guide to the gas price crisis.
Do all business gas rates come with a standing charge?
Not all business gas rates come with a standing charge. If you get priced with a standing charge, you can contact your supplier and discuss having gas rates with no standing charge. However, this is usually offset by a higher unit rate.
A zero-standing charge gas tariff isn’t necessarily the cheapest option depending on your commercial gas consumption.
We advise you to shop around, compare business gas prices, and understand exactly what you’re looking for in your new supplier.
What are the best business gas rates for small businesses?
Our business gas experts recommend that a fixed rate gas tariff offers the best option for most small businesses.
A fixed-rate tariff offers simplicity as you’ll know exactly how much your business will be charged for the gas used, making gas bills highly predictable. Additionally, you can access cheaper rates by agreeing to a 1 to 3-year contract with a particular supplier.
What are the benefits of fixed-rate business gas rates?
A fixed-rate business gas tariff is the most popular option for SMEs, and here are the three key benefits of choosing a fixed price tariff:
Easy to forecast – The costs in a fixed-rate business gas tariff are easy to understand and forecast. With fixed gas rates, you’ll have certainty over the cost of each kWh of gas your business consumes. In budgeting for your gas bills, you’ll only need to estimate how much gas your business will use each month.
Protection against rising costs – A fixed business gas tariff provides cost certainty for small companies. The cost of heating offices with a gas boiler is a significant overhead for small businesses. With a fixed tariff, you’ll be protected against any rises in the wholesale cost of gas during the tariff.
Access to cheaper gas rates – Fixed-rate business gas rates are usually cheaper than the equivalent standard variable tariff as they commit your business to use a particular business energy supplier for several years. Most companies will save immediately by switching to a fixed-rate business gas tariff.
Are business gas prices capped?
No, there isn’t a business energy price cap protecting companies from the most expensive business gas rates.
The lack of a business gas price cap means suppliers’ out-of-contract rates can be much higher than current market prices. Gas comparison for business is essential to getting a fair price on commercial gas bills.
How can I get cheaper business gas rates?
All business gas tariffs have a unit charge per kWh of gas consumed, so the easiest way to get cheaper business gas rates is to use less gas simply. Here are a few quick tips for reducing your business gas rates through lower consumption:
- Reduce water temperature – Hot taps are often too hot for comfort and waste gas through the additional energy needed to heat the water.
- Smart heating timers – Heating your premises when all your staff have gone home for the evening is a huge waste of gas.
- Boiler replacement – Modern boilers now have efficient ratings of over 90%, a significant increase from a decade ago. Replacing an older boiler with a modern model could quickly pay for itself in greater heating efficiency. Alternatively, investing in a heat pump could altogether remove your gas dependency.
Once you’re satisfied with your gas efficiency, the next step is to get the best deal for your gas supply. We recommend using a business gas comparison service to quickly collect quotes from across the market.
What impacts business gas prices?
There are a few elements that affect the price of business gas. Here are three key factors that determine business gas rates:
- Gas importing: We used to produce all of our gas in the UK, but due to dwindling resources, we must import gas to meet our consumption needs. The import price of gas in Europe affects the cost of gas that your business pays.
- Gas storage: Gas storage in the UK is severely limited. In 2017, one of the largest gas storage sites was shut down, meaning that the UK can now only store four days’ worth of gas. Lack of storage makes the price of business gas more volatile.
- Supply and demand: As demand for gas increases, such as during a cold winter, prices increase. It’s a huge factor when it comes to pricing gas, and your business will be affected by changes in both supply and demand.
Read our monthly report on the business energy market.
Can suppliers increase business gas prices mid-contract?
If you’re on a variable rate contract, you will, unfortunately, be riding the highs and lows of the business gas market, and some days you’ll be paying considerably higher rates than other days.
As long as your business is locked into a fixed rate business gas contract, they can’t. During a fixed-rate contract, your supplier cannot increase their business gas price per unit kWh.
A few exceptions exist to the rules around fixed rate business gas contracts. Check out our article on unexpected increases in business energy contracts.
Does a landlord pay business gas rates?
It depends on the specific terms of your commercial lease; these are the most common arrangements:
- The landlord is responsible for paying business gas rates and has budgeted for this within the lease payments.
- The landlord is responsible for paying business gas rates but will pass these through separately in the monthly lease invoice.
- The tenant is responsible for the business gas supply and must set this up and pay for it themselves.
Both tenant and landlord must understand who is responsible for the gas supply, and we recommend discussing this before moving in.
Who has the best business gas prices?
It depends on multiple factors. Finding the best business gas prices depends on your annual gas consumption and the size and location of your business.
It’s best to shop around and compare gas prices to ensure you get the best deal. Other factors that will affect your prices are the length of the contract and the unit prices when requesting a quote.
Who has the cheapest business gas rates?
It’s difficult to say which business gas supplier has the cheapest rates and prices. Prices fluctuate multiple times daily and depend on location, usage, tariff type, and many other factors.
We recommend using our business gas comparison tool to compare the latest prices and find the cheapest business gas rates available for your business today.
Is gas cheaper for businesses?
The government’s latest energy prices data directly compared business and home gas bills. Here’s what they found in 2022:
- Average annual home gas prices – £1,272
- Average equivalent business gas prices – £1,075
Business gas supplies were £197 ( ~15% ) cheaper than those for households. The prices shown assume 13,600 kWh of annual gas consumption in both cases.
Business gas prices per kWh are usually cheaper as businesses typically sign up for a longer contract than your average household.
This means the supplier can buy the entire contract’s worth of gas in bulk at a cheaper rate and pass any savings onto the business.
However, unlike homes, companies pay VAT at the standard rate and the climate change levy on top of their gas bills.
Why are business gas standing charges so high?
The standing charge in a business gas tariff is charged daily regardless of whether your business actually uses any gas. This fixed charge can seem like an unnecessary daily expense, but it’s worth remembering the business gas standing charge pays for:
- The maintenance of your connection to the local gas transporter.
- Renting your business gas meter.
- Your supplier’s customer services department and billing your company each month.
Most buildings in the UK are designed to rely on gas for heating purposes, but some are already beginning to phase this out in anticipation of net-zero by 2050 by:
- Installing heat pumps
- Installing solar PV
- Exploring electricity arbitrage to finance it.
Which region has the cheapest business gas prices?
Businesses served by the East Midlands gas distribution network enjoy the cheapest gas rates per kWh.
Cadent Gas operates the East Midlands gas distribution network and has the cheapest network costs, a significant component of business gas rates.
What have been the cheapest business gas rates in the last two years?
Business gas rates were much cheaper two years ago before tensions in Ukraine started to ramp up.
The Government’s July to September 2021 energy price update shows that businesses paid an average rate of 2.91p/kWh for gas supplies two years ago. Business gas rates are now significantly higher than this figure.