UK business electricity is not one market. It is roughly six wholesale exposures, fourteen distribution regions, several contract structures, and a broker layer that the regulator is still rewriting in 2026. The headline p/kWh figure most quote engines display is the smallest part of the story. The rest is what determines whether a four-year fix lands at the right number or 30% above it.
TL;DR
- There is no Ofgem price cap on non-domestic electricity. Cap rules under the Tariff Cap Act 2018 apply only to default and standard variable domestic tariffs.
- A business unit rate is built from four layers: wholesale electricity, non-commodity costs (network, policy, balancing), the standing charge, and the Climate Change Levy at 0.775 p/kWh for electricity in 2025-26 (HMRC CCL rates, April 2025 update).
- Contract length is the single biggest lever. 1-year, 2-year, 3-year and 4-year fixes price differently because suppliers hedge wholesale forward; flex contracts and PPAs are a separate category.
- Ofgem's January 2026 statutory consultation on Third Party Intermediary rules brings broker fee disclosure and complaints-handling under the supply licence, changing what comparison sites must show businesses.
- Octopus Energy publishes business rates online. Most of its larger competitors do not, which means published-rate comparison only covers a fraction of the market.
Last reviewed: May 2026
How the UK business electricity market is actually structured
The non-domestic electricity supply market in Great Britain sits under Ofgem's standard supply licence but outside the domestic price cap. That single fact reshapes everything that follows. A small London cafe on a 25,000 kWh annual profile and a Newcastle manufacturer pulling 4.8 GWh through a half-hourly meter are nominally in the same market, but they negotiate through entirely different channels, with different hedging cycles and different protections.
Ofgem classifies non-domestic customers in tiers that matter for protection rules. The microbusiness definition, set out in the supply licence conditions and reaffirmed in Ofgem's non-domestic market review concluded across 2023 and updated through 2024-2025, covers businesses that use no more than 100,000 kWh of electricity per year, or employ fewer than ten full-time equivalent staff with annual turnover below the threshold set in the licence. Above microbusiness, protections taper. Below microbusiness, the supplier must publish principal terms and offer a written contract; the customer must receive contract end-date notification windows.
Distribution geography is the other structural detail most comparison engines hide. The fourteen distribution network operator regions (Northern Powergrid, UK Power Networks London, UK Power Networks South Eastern, UK Power Networks Eastern, Western Power Distribution areas now under National Grid Electricity Distribution, SP Energy Networks Manweb, SP Energy Networks Southern, SSEN Southern, SSEN Scottish Hydro, Electricity North West, plus the rest) charge different Distribution Use of System rates. Those rates flow through into the non-commodity layer of any quote. A Manweb postcode pays differently from a London postcode for the identical kWh, before any supplier margin enters the calculation.
Suppliers fall into rough bands. The largest non-domestic suppliers by volume include British Gas business, EDF, E.ON Next business, SSE Business Energy (now Ovo for Business in part of the customer base), and Scottish Power. Mid-tier and specialist names include Octopus Energy for Business, Opus Energy (part of Drax), Total Energies, Smartest Energy, Crown Gas and Power, and Yu Energy. The market is more concentrated at the large industrial end and more fragmented at the SME end.
What a business electricity unit rate is actually made of
Treating the p/kWh figure as a single number is the first mistake businesses make when comparing quotes. A quoted unit rate is a stack.
The wholesale layer is the supplier's cost of buying electricity, usually hedged forward in tranches against the GB day-ahead and forward curves at the N2EX and EPEX SPOT auctions and the OTC market. For a 3-year fixed contract starting in summer 2026, the supplier is buying calendar 2027 and calendar 2028 baseload and peak shape today. That is why two quotes from the same supplier on the same day, one for a July start and one for an October start, can differ by several pence per kWh: they are hedging against different forward strips.
The non-commodity layer is everything that arrives between the wholesale market and the meter. It includes Transmission Network Use of System (TNUoS) and Distribution Use of System (DUoS) charges, Balancing Services Use of System (BSUoS), the Capacity Market levy, the Renewables Obligation (legacy), Contracts for Difference levy, the Feed-in Tariff levy (legacy), and several smaller cost recovery streams. DESNZ Q1 2026 industrial energy price statistics show non-commodity costs have remained roughly 50 to 60% of the typical non-domestic unit rate at small and medium consumption bands once wholesale fell back from the 2022-2023 peak, with regional variation driven by DUoS.
The standing charge is a daily fixed fee per meter point. It funds the supplier's fixed cost of serving the meter plus a slice of network capacity. For a business with multiple sites the standing charge stack matters more than most owners realise: a portfolio of forty small retail units pays forty standing charges every day, not one.
The Climate Change Levy is a per-kWh tax collected by suppliers on behalf of HMRC. The main rate for electricity in 2025-26 under HMRC's CCL rates published April 2025 is 0.775 p/kWh, with a reduced rate available to businesses signed up to a Climate Change Agreement. Many SMEs are surprised to see CCL itemised on a non-domestic bill at all; it does not appear on a domestic invoice.
A VAT line sits on top. Non-domestic electricity is charged at 20% VAT unless the business meets the de minimis threshold (33 kWh per day average) or qualifies for a 5% rate under charitable or residential use rules. The de minimis rule is what allows a very small office or a holiday let to qualify for 5% VAT on electricity.
Contract types: fixed, flex, PPA and what each is for
Most SMEs end up on a fixed-term, fixed-unit-rate contract because it is the only structure that quote engines render cleanly. The fixed contract locks unit rate and standing charge for 12, 24, 36 or 48 months. Suppliers price the longer fixes off forward wholesale plus a risk premium. In a falling forward curve, the 4-year fix prices above the 1-year. In a rising curve, the inverse.
Flex contracts split the wholesale cost from the non-commodity stack. The business takes the non-commodity layer at supplier rates but buys wholesale electricity in tranches against an index, typically the GB baseload forward. Flex is the default at the larger SME and Industrial and Commercial end because the customer can decide when to lock and how much to lock, rather than handing that timing decision to the supplier. The catch is that flex requires either an in-house energy desk or a paid flex management partner, which is rarely economic below roughly 5 GWh of annual consumption.
Power Purchase Agreements are a third category. A corporate PPA is a long-dated contract between a business and a generator (often a renewable asset) for some or all of its electricity volume. PPAs run 5 to 15 years, are typically priced as a fixed price or a discount to wholesale, and require a creditworthy off-taker. They are the dominant procurement form for large UK corporates targeting Scope 2 reduction; they are essentially unavailable to the average SME.
Deemed and out-of-contract rates are the trap. When a business does not renew before the contract end date, the supplier rolls the meter onto a deemed or out-of-contract tariff. Ofgem rules require suppliers to publish these rates, and the rates are routinely 30 to 80% above the equivalent fixed contract. The 17-day cooling-off window applies only to specific microbusiness contract paths, not to every business switch.
How to actually compare quotes
A meaningful comparison starts with a year of HH (half-hourly) consumption data if available, or twelve months of monthly meter reads if not. The kWh consumption profile, the peak demand pattern, and the time-of-use split decide which suppliers can quote competitively. A business with concentrated weekday daytime load pays differently from a 24/7 cold-storage operator on the same annual kWh.
The shape of the load matters because it interacts with the supplier's hedge. Suppliers hedge baseload and peak separately. A business that is mostly off at weekends and overnight wastes the baseload hedge a supplier is buying to serve it; that inefficiency lands in the quote as a higher unit rate.
Time-of-use tariffs are increasingly available to SME meters that have a smart or AMR meter installed. A three-rate (day, night, evening/weekend) tariff can produce real savings for a business that can shift demand. Octopus Energy for Business has published an Agile-style variable rate for non-domestic customers on half-hourly settlement; few competitors have followed. In practice, most SME load profiles do not move enough to justify the variability, and a fixed rate is the calmer choice.
Standing charges are the most underrated comparison line. Two quotes with the same unit rate can differ by hundreds of pounds a year on the standing charge alone. For a business with a small load and a long open period (a community hall, a seasonal cafe), the standing charge can exceed the unit-rate cost across a 12-month period.
The table below sets out the rough structure of where each cost line lands at three illustrative non-domestic consumption bands. Figures are indicative of the 2025-26 market shape rather than supplier-specific quotes.
| Cost layer | Microbusiness (15,000 kWh/yr) | SME (75,000 kWh/yr) | Mid-market (500,000 kWh/yr) |
|---|---|---|---|
| Wholesale share of unit rate | roughly 35-40% | roughly 40-45% | roughly 45-55% |
| Non-commodity share (TNUoS, DUoS, BSUoS, policy) | roughly 45-55% | roughly 40-50% | roughly 30-40% |
| Standing charge per day | 30p to 90p | 50p to 250p | negotiated, can run into pounds |
| Climate Change Levy (HMRC, 2025-26) | 0.775 p/kWh | 0.775 p/kWh | 0.775 p/kWh or reduced under CCA |
| VAT | 20% (or 5% if under de minimis) | 20% | 20% |
| Typical contract path | fixed 1-3 yr | fixed 1-4 yr or basket flex | flex, basket, or PPA |
Comparison engines that display only the headline unit rate hide most of this stack. A genuine business electricity comparison surfaces the standing charge, the contract length, the early termination terms, and any non-standard clauses around consumption tolerance.
The broker layer and what changes in 2026
Most UK businesses arrive at a supplier through a Third Party Intermediary: a broker, an energy consultant, or a price comparison platform. The broker layer is large, fragmented, and was, until recently, only lightly regulated. Brokers are typically paid through a commission baked into the unit rate quoted to the customer, usually expressed as p/kWh of uplift across the contract term.
Most UK businesses leave switching too late.
That model is changing. Ofgem's January 2026 statutory consultation on TPI rules, published as part of the non-domestic market review programme, sets out proposed supply licence changes that would require suppliers to make TPI commission visible, to vet TPIs against minimum standards, and to refuse contracts arranged by TPIs that do not meet those standards. The consultation followed earlier 2024 and 2025 publications on broker complaints and microbusiness protections.
The practical effect, once the rules land in supply licence conditions later in 2026, is that any quote a microbusiness receives from a broker should carry an explicit statement of the commission included. A quote that does not is a flag.
The Energy Ombudsman's jurisdiction over broker complaints has also expanded. Since the Alternative Dispute Resolution scheme extended in 2022 and again in 2024, microbusinesses can escalate broker disputes to Ombudsman Services Energy where the broker is registered under the relevant code. Coverage is not universal across all brokers, which is part of why Ofgem's 2026 rules push toward supplier-side vetting.
The catch is timing. Even after the rules land in the supply licence, enforcement runs through supplier behaviour, not direct regulator action on brokers. A small operator should still check that any broker quoting them is registered with a recognised code body (Utilities Intermediaries Association, the Energy Consultants Association, or similar) and is signed up to an ADR scheme.
Published-rate suppliers versus quote-only suppliers
The market splits cleanly into suppliers that publish their non-domestic rates online and suppliers that do not. Octopus Energy for Business publishes microbusiness tariffs on its public site. So do a handful of smaller specialists. Most of the large suppliers, including British Gas business, EDF, E.ON Next, SSE Business Energy, and Scottish Power, quote only on application: the customer (or the broker on their behalf) submits MPAN, postcode, and annual kWh, and the supplier returns a bespoke quote that may sit valid for as little as a few hours.
Octopus publishes its business rates. Most of its competitors do not. That alone changes the negotiation, because a small operator can use the published Octopus rate as a benchmark when soliciting quotes from non-published suppliers. In practice, the published rate is rarely the lowest in the market, but it sets a ceiling for a small consumer with no other lever.
Transparency is a procurement weapon.
For larger consumers, the published-rate question is less relevant. Above roughly 100,000 kWh per year, every quote is bespoke and the broker channel dominates.
Switching and the 17-day rule
The Ofgem-coordinated 17-day faster switching process, launched in 2022 and refined through 2023-2024, applies to non-domestic supply where the new contract is signed inside the contract end window. The 17-day clock starts when the new supplier triggers the registration. For a business that has missed its contract end window, the meter sits on a deemed or out-of-contract rate until the new supplier completes registration; the supplier exit is no longer blocked by objection on the basis of debt alone unless arrears exist. A material number of SMEs miss the contract end window because the renewal notification arrives during a busy operational period (Q4 retail, Q1 hospitality), is filed by an office manager who has since changed role, or is sent to an old email address. The deemed rate kicks in, the meter sits at 30 to 80% above market for whatever number of weeks the switch takes to organise, and the saving from the new fix is partially eaten by the deemed-period exposure. The pattern repeats across thousands of meters every quarter, according to Citizens Advice case data on non-domestic switching complaints. A diary entry six months before contract end, with the renewal window highlighted, is the single cheapest control a small operator can put in place. Even a calendar reminder paired with a backup email recipient routinely saves more than any marginal supplier negotiation would.
For a business in Wales or Scotland the same rules apply: non-domestic supply is reserved to Westminster and Ofgem regulates Great Britain as a single market. Northern Ireland operates separately under the Utility Regulator (NIAUR) and is not covered by Ofgem rules; a Belfast SME compares Power NI, SSE Airtricity NI, and Click Energy rather than the GB supplier set.
Reading a non-domestic quote
A complete non-domestic electricity quote should set out: the unit rate (p/kWh, sometimes split day/night), the daily standing charge, the contract term, the start and end dates, the consumption volume the quote is based on, the tolerance band (often plus or minus 20 to 30% before reconciliation kicks in), early termination terms, the broker uplift if any, and the renewal notification window the supplier will use. Anything missing should be requested in writing.
Consumption tolerance is the line most often misread. A fix priced against 50,000 kWh with a plus-or-minus 25% tolerance will reconcile if actual consumption falls outside 37,500 to 62,500 kWh; the supplier reprices the excess (or shortfall) at the prevailing wholesale rate plus an admin charge. A business that closes a site mid-contract can trigger reconciliation as easily as one that expands.
Early termination terms vary widely. Some suppliers permit termination only by paying out the remaining unit-rate margin on forecast volume. Others charge a fixed administrative fee. The difference can be four figures or five figures on a 4-year contract.
The exit clause matters as much as the entry rate.
One last detail. The MPAN top-line on every electricity bill carries a profile class (01 to 08), a meter time-switch code, a line loss factor class, and a distribution region. The first two digits of the MPAN bottom-line are the supplier ID; the next eight are the unique meter point identifier. A quote that has been issued against the wrong MPAN or wrong profile class will mis-shape the hedge and produce reconciliation charges later. This is worth a 60-second check before any contract is signed.
Editorial disclaimer. KaelTripton is an independent UK publisher. This article is editorial, not personal financial or energy procurement advice. Rates, caps, grant levels and supplier offers move; verify any figure with the named primary source before acting on it. KaelTripton does not earn commission from suppliers or brokers mentioned.
Frequently asked questions
Is there an Ofgem price cap on business electricity?
No. The Ofgem default tariff cap, set under the Tariff Cap Act 2018 and updated quarterly, applies only to domestic default and standard variable tariffs. Non-domestic supply has no cap; protections for microbusinesses come through the supply licence conditions, not the cap mechanism.
What is the Climate Change Levy on business electricity in 2025-26?
HMRC's CCL main rate for electricity, updated April 2025, is 0.775 p/kWh for 2025-26. Businesses signed up to a Climate Change Agreement with their sector trade body can claim a reduced rate; the levy does not apply to domestic supply.
How long should a business electricity fixed contract run?
It depends on the wholesale forward curve at the time of signing. When forwards are falling, shorter fixes (12 to 24 months) usually price better; when forwards are rising, longer fixes (36 to 48 months) lock in lower rates. Contract length is a hedging decision, not a marketing choice.
What changes for business electricity brokers in 2026?
Ofgem's January 2026 statutory consultation on Third Party Intermediary rules proposes that suppliers vet brokers, disclose commission, and refuse to accept contracts from brokers not meeting minimum standards. The rules are expected to land in supply licence conditions during 2026, with phased implementation.
Can a business be moved to a different DNO region?
No. Distribution Network Operator regions are tied to geography. A meter in a SP Energy Networks Manweb postcode is always served by that distribution network; the supplier on top of it can be switched freely, but the underlying DUoS charges follow the postcode.
Does the 17-day switch process apply to every business?
It applies to standard non-domestic supply switches where no debt block or objection sits on the meter. Switches involving complex multi-site portfolios, half-hourly meters with bespoke contract structures, or deemed-rate disputes can take longer; the 17-day figure is the headline target for routine switches.
Sources
- Ofgem - Energy policy and regulation landing page (2026)
- Ofgem - Non-domestic market review: TPI rule changes, January 2026 statutory consultation
- Ofgem - Energy advice for businesses
- DESNZ - Energy prices statistics collection, Q1 2026 release
- DESNZ - Department for Energy Security and Net Zero homepage
- HMRC - Climate Change Levy rates, April 2025 update
- Ombudsman Services Energy - non-domestic complaints jurisdiction
- Citizens Advice - energy supply guidance for small business
