Business Energy Prices

Since the deregulation of the Energy Industry in the UK in the late 1990s, energy prices have become dependant on the supply market not only in the UK, but in Europe and even the rest of the world. UK business energy prices are now determined in a traded market, which was not the case before 1998, when monopolies existed in energy supply.

The UK government still has an important role in meeting the energy demand of business despite the deregulation, and with its watchdog bodies, such as OFGEM and Energywatch, plays a part in regulating energy prices.

The UK is not only a consumer of energy but is also a producer. In 2006 the UK was the world's ninth-largest consumer of energy and the 15th largest producer. In 2007 the UK had a total energy output of 9.5 quadrillion BTUs (British Thermal Units) from oil, natural gas, coal nuclear and renewables. Production has declined over recent years and the UK is now a net importer of energy, making the country more susceptible to price fluctuations in the market.

The Fluctuation of Business Energy Prices

With market forces now in play in the energy market, the price of energy supplied to UK markets is more volatile and has fluctuated over the last ten years, but with an upward trend.

The amount your business pays for energy will depend on the fuel you use, your bargaining power as a user (larger users having more clout with the suppliers), the length of your contract with your supplier and external factors such as crude oil prices.

Fluctuations in the price of crude oil affect the prices of domestic and industrial fuels in the UK. The price of crude oil changes for a variety of reasons including: oil shortages (1973); political instability (1990/1); over-supply and weaker Far East demand (1998); natural disasters such as Hurricanes Katrina (2005); geopolitical tensions and a weak dollar (2007-2008).

In July 2008, average monthly crude oil prices hit a new high, 10.5% higher than in the late 1970's. By January 2009, oil prices had dropped back to around $40/barrel due to concerns over poor global economic performance following the recession but by June 2009 prices had increased again to around $70/barrel. This was due to militant action and supply concerns in Nigeria, and indications of an increase in demand in the US and China

Average Prices 1999 - 2008 for non-domestic users

Average coal prices increased each year between 1999 and 2005, with the exception of a fall in 2003. Prices fell again in 2006 but increased in 2007 and went up even more in 2008.

Average oil prices have increased every year from 2001 onwards.

Average gas oil prices have risen in each year since 1999, with the exception of a fall in 2002.

Average electricity prices fell between 1999 and 2003, rose again over the period 2004 to 2006, fell in 2007, and have risen once more in 2008.

Average gas prices rose between 1999 and 2006, with the exception of a fall in 2002, then fell in 2007, and have risen once more in 2008.

Business and Commercial Rates in the UK

When it comes to finding the business electricity prices and suppliers rates to get the lowest guaranteed rates and tariffs for your company there are now a wide range of national and independent UK energy suppliers to choose from. Switching suppliers has become common to try and maximize savings.

Most business users are looking to reduce costs and, as there is no real difference between the energy companies, price is the major factor which will determine the choice of supplier. Inertia and the stories of aggressive and misleading marketing strategies by some of the new companies have meant that many businesses have remained with their original supplier despite the fact that they may not be offering the best prices.

Switching has become easier for smaller companies since Ofgem introduced new rules for small businesses, with fewer than 10 employees, but for larger businesses it may not be so easy to get out of your current contract. It can be done and we explain how in our article "How to get cheap business electricity"