Business energy can be expensive because the price a business pays includes more than the wholesale cost of electricity or gas.
Wholesale energy is a major part of the bill and can change significantly in response to supply and demand, weather, gas storage levels, global events and geopolitical disruption. UK electricity prices can also be affected by gas prices because gas-fired generation often helps to set the wholesale electricity price.
However, wholesale energy is only part of the final cost. Business energy prices can also include network charges, environmental and policy costs, supplier operating costs, metering charges and supplier margin. Some of these non-commodity costs can increase even when wholesale prices are falling.
The timing of a contract matters as well. Suppliers buy energy at different times and use different purchasing strategies, so contract prices do not necessarily move immediately with the day-to-day wholesale market.
Unlike domestic customers, businesses are also not protected by the energy price cap. The amount an individual organisation pays will therefore depend on its consumption, contract type, when the energy was purchased and the commercial terms offered by its supplier.
