Business Energy for Your Trade Premises: What to Watch for

Setting Up a Supply at a New Unit

When you take on a new workshop, unit or yard, the electricity supply is rarely as straightforward as flicking a switch. Every commercial meter point in Great Britain has a unique MPAN, the Meter Point Administration Number. This 21 digit reference identifies your supply and you will need it for everything from getting quotes to switching suppliers. You can usually find it on a previous bill left at the premises, on the meter itself, or by asking the landlord or previous tenant.

If the supply is already live, someone is already paying for it. That someone might be a previous tenant who forgot to close the account, or it might be you by default. When a premises has no named account holder, the supply falls onto what is called a deemed contract with whoever happens to be the registered supplier for that meter. Deemed rates are significantly higher than negotiated contract rates, sometimes double or more. You can end up on a deemed contract without realising, simply by using electricity before you have signed up with a supplier.

To avoid this, contact a supplier as soon as you have access to the unit. If you are unsure who supplies the meter, you can request this information through the Meter Point Administration Service or ask a supplier to look it up using the MPAN. The priority is to get a proper contract in place from day one, or as close to it as possible.

If the premises has no supply at all, you will need to apply for a new connection through the local Distribution Network Operator. You can find your DNO through the Energy Networks Association website. Connection timescales and costs vary depending on the work required, so get this process started early if you are fitting out a new unit.

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How Business Energy Contracts Work

Business electricity contracts differ substantially from domestic ones. Most are fixed term, typically one to three years, with a set price per kilowatt hour and a standing charge. At the end of the term, you have a window during which you can switch supplier or negotiate a new deal. The length of this window varies by contract, ranging from a few weeks to several months depending on your supplier and terms.

The rollover trap catches out many small trade businesses. While some suppliers send courtesy reminders, they are not obliged to do so. If you do not serve notice within the required period, you are locked into a new contract automatically, often at a much higher rate. Some contracts require 90 days notice before the end date, others require 60 or 30. Read your terms carefully and put a reminder in your calendar well ahead of time.

Microbusinesses do have some protection here. Since 2013, Ofgem rules have required suppliers to provide clearer information about contract end dates and renewal terms for smaller enterprises. However, unlike domestic energy, business contracts do not benefit from the Ofgem price cap. You are responsible for checking that the deal you sign is competitive. The Ofgem website has guidance on your rights as a microbusiness and what to do if something goes wrong.

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Broker Commission Hidden in the Unit Rate

Many electrical contractors use a broker to arrange their business energy, and there is nothing wrong with that in principle. A good broker can save you time and help you compare contracts quickly. The issue is how they get paid.

Most brokers earn commission from the supplier, not from you directly. This commission is typically added to your unit rate and paid out over the life of your contract. The problem is that this commission is rarely disclosed upfront, and it can vary significantly. Some brokers add half a penny per kilowatt hour, others add two or three pence. Over a two or three year contract on a busy workshop, that adds up to hundreds or even thousands of pounds.

You have the right to ask any broker how much commission they are receiving and how it is structured. If they refuse to tell you, treat that as a warning sign. You can also verify whether commission has been embedded in a quote by comparing it against quotes you source directly from suppliers.

Practical Steps for Your Trade Premises

• Get your MPAN as soon as you have access to the unit and contact a supplier before you start using electricity.
• Avoid deemed rates by having a contract in place from day one.
• Read your contract terms carefully, paying close attention to the notice period and end date.
• Set a calendar reminder at least 90 days before your contract ends to give yourself time to compare options.
• If using a broker, ask in writing how much commission they are adding to your rate.
• Compare at least three quotes before signing, including at least one sourced directly from a supplier.
• Check Ofgem and GOV.UK for guidance on microbusiness energy rights and complaints procedures.

If you want to see whether your current contract includes hidden commission, try our free Hidden Energy Broker Commission Checker.

Getting your energy sorted properly when you first take on a unit will save you money and avoid nasty surprises. A bit of homework upfront means you can focus on building your electrical business rather than chasing billing problems later.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Electrical Business Startup Cost Calculator lets you work out what it really costs to set up as an electrician: tools, van, test equipment, certification, insurance and registration, so you know how much you need to start. Try it now →