A side-by-side comparison of business energy quotes only works if the lines being compared are the same lines. In May 2026 the typical broker quote sheet presented to a UK SME includes unit rate, standing charge, and contract term as headline figures, with five or six secondary cost components either footnoted, abbreviated, or absent. A quote that looks 1p per kWh cheaper on the headline can be 0.4p per kWh more expensive once the secondary stack is normalised.
TL;DR
- A meaningful comparison needs unit rate, standing charge, CCL, VAT band, and (for half-hourly sites) KVA capacity charges and reactive power lines normalised to a single annual total.
- VAT at 20% is the default for non-domestic supply; the reduced 5% rate applies where supply qualifies as domestic, charitable non-business, or under the HMRC de minimis threshold.
- Climate Change Levy main rate for electricity from 1 April 2026 is published on the gov.uk environmental taxes pages and adds to the unit cost.
- Broker quote sheets typically include an unstated 1-4p per kWh commission uplift recovered through the unit rate.
- Ofgem's data portal carries the wholesale and non-domestic price series that allow customers to see whether a quote is anchored to a current wholesale level or to an older hedge position.
Last reviewed: May 2026
What is on a quote sheet, and what is missing from it
A typical broker quote sheet for a UK SME in May 2026 lists three or four headline columns per supplier: unit rate (p/kWh), standing charge (p/day), contract term (months), and sometimes a "total annual cost" figure that combines the first two.
The presentation looks decisive: pick the lowest total and sign.
The components missing or relegated to footnotes usually include the following: the assumed annual kWh used to calculate the total annual figure; the Climate Change Levy treatment (included or excluded from the unit rate); the VAT band assumed (20% or 5%); the broker commission embedded in the unit rate (if any); the early-termination fee if the customer needs to exit before end of term; the KVA capacity charge for half-hourly metered sites; and the reactive power treatment for sites with low power factor.
For a half-hourly metered site, the unit rate alone is functionally incomplete. The KVA capacity charge (sometimes called "agreed supply capacity" or "MIC") is a separate monthly line that recovers the cost of the distribution network capacity reserved for the site, regardless of consumption. A site with a 200 KVA agreed capacity pays for that 200 KVA every month, whether it draws 200 KVA or 20 KVA.
The wholesale spread: what Ofgem data shows
Wholesale electricity in the UK is traded in calendar contracts (baseload and peak), monthly blocks, and day-ahead. The 12-month forward baseload price (the most relevant indicator for a non-domestic fixed contract) is published in the Ofgem data portal alongside other market series. The DESNZ Quarterly Energy Prices statistical release also reports wholesale and retail series for non-domestic customers.
Ofgem's Q1 2026 data portal release showed a 12-month forward baseload electricity price in the high-teens p/kWh through Q1, with intra-quarter movement in the order of 2-3p per kWh either way. By May 2026 the same forward had moved within a similar band, depending on the trading week.
The catch is that a supplier hedges procurement weeks or months ahead of the contract start date for a customer. A supplier quoting a fixed unit rate in May 2026 may have locked the wholesale block in March 2026 or earlier. The customer sees a 28p per kWh quote; behind it is a 14p per kWh hedge taken six weeks ago plus the full non-commodity stack and the supplier's operating margin. A customer who waits two weeks may see the same supplier quoting 27p, because the supplier has re-hedged in a falling market, or 30p, because the market has moved against the supplier's last hedge.
Normalising the comparison: the working method
The arithmetic that makes a quote sheet comparable to another quote sheet:
- Take the proposed unit rate (p/kWh) and multiply by the actual annual kWh from the most recent bill.
- Add the daily standing charge (p/day) multiplied by 365.
- Add the Climate Change Levy: for electricity from 1 April 2026, the main rate published on the gov.uk environmental taxes pages multiplied by the annual kWh. For gas, the relevant rate multiplied by the annual kWh.
- Apply VAT at 20% or 5% based on the qualifying band under HMRC Notice 701/19.
- For half-hourly sites only, add the KVA capacity charge (typically expressed in p per KVA per day) multiplied by the agreed capacity and 365.
- For half-hourly sites with low power factor, add the reactive power charge.
- Subtract any in-life credit (smart meter installation credit, dual-fuel discount) committed in writing.
The result is a normalised annual total for that quote.
Repeat for each supplier on the sheet. The cheapest annual total is, on the supplied assumptions, the cheapest contract.
| Cost component | Typical magnitude (May 2026, microbusiness electricity) | Notes |
|---|---|---|
| Unit rate | 24p-32p per kWh | Includes non-commodity charges and broker uplift if applicable |
| Standing charge | 45p-95p per day | Varies by DNO region; spreads across 365 days |
| Climate Change Levy (electricity) | 0.847p per kWh main rate from April 2026 | Published on gov.uk environmental taxes pages; verify current rate |
| VAT (electricity) | 20% default; 5% if qualifying | De minimis threshold under 1,000 kWh per month allows 5% under HMRC Notice 701/19 |
| KVA capacity (HH only) | Variable by DNO; only on half-hourly sites | Charged on agreed capacity, not actual draw |
| Reactive power (HH only) | Penalty for low power factor | Avoidable by power factor correction equipment |
| Early-termination fee | Variable per supplier contract | Often the difference between fixed rate and prevailing market rate, plus admin |
VAT: the largest hidden variable
The VAT band can shift the annual total by more than any individual unit rate negotiation typically achieves. HMRC's VAT Notice 701/19 sets out the conditions for the reduced 5% rate on fuel and power: supply for domestic use, supply to a charity for non-business use, or supply below the de minimis threshold (1,000 kWh per month for electricity, 4,397 kWh per month for gas).
A microbusiness that draws below 1,000 kWh per month consistently is paying 5% VAT every month under de minimis. A microbusiness that occasionally crosses the threshold pays 20% in the months it crosses and 5% in the months it does not. The supplier applies the rate based on the meter read, so consumption pattern matters.
The catch is that suppliers do not always automatically apply the reduced rate. The customer must complete a VAT declaration form (VAT 1614A or supplier-specific equivalent) to confirm the qualifying conditions. A microbusiness that has been paying 20% VAT for years because no one filed the form can apply for a backdated refund through the supplier, usually for up to four years. The backdated refund can run into four-figure sums for a cafe, salon, or small office. HMRC publishes guidance on the qualifying conditions and the declaration process through VAT Notice 701/19. The supplier processes the refund; HMRC does not pay it directly to the customer. The refund applies to historical periods where the qualifying conditions were met; it does not apply where the consumption pattern moved above the de minimis threshold for the period in question. The administrative effort to file the declaration and chase the refund is modest, usually a single afternoon, and the financial return per hour of effort is among the highest available in non-domestic energy procurement.
For a 9,000 kWh per year cafe paying 5% rather than 20% VAT: the saving across a 24-month contract at 28p per kWh unit rate is roughly 756 pounds.
That is larger than the difference between most viable competing quotes.
The broker uplift line: how to find it
A broker quote sheet does not, in most cases, list "broker commission" as a separate column. The commission is embedded in the unit rate column, typically as a 1-4p per kWh uplift, occasionally higher. The Ofgem TPI rule changes implemented from December 2024 require brokers serving microbusinesses to disclose the commission in writing on customer request.
The request needs to be explicit. Sample wording: "Please confirm in writing, before signing, the broker commission payable on this contract, expressed both in pence per kWh of the unit rate and as a total pound figure across the contract term. Please also confirm whether the commission is paid by the supplier and recovered through the unit rate, or charged separately."
Most established brokers respond to the question. Some respond with the commission figure framed as a "service fee" or "arrangement fee". Some redirect the question to the supplier. A broker that declines to disclose, or that disappears once the question is asked, is signalling that the commission is larger than the customer expects and that the broker would rather not lose the deal by saying so.
Half-hourly comparison: KVA, ToU, and the bespoke quote problem
For half-hourly metered sites (mandatory above 100 kW maximum demand, voluntary below), the unit rate is typically split into time-of-use bands: night, weekday, weekend, sometimes evening peak. A quote that compares a 22p per kWh night rate from supplier A against a 26p per kWh single rate from supplier B is comparing different products.
The honest comparison for a HH site multiplies each ToU band rate by the actual consumption in that band (taken from the half-hourly settlement data), sums the result, and adds the KVA capacity charge, the TNUoS pass-through if priced separately, the BSUoS, and the standing charge. The annual total for a HH site can be 15-25% above the headline unit rate calculation if the KVA capacity is generous relative to actual draw.
A 180 KVA hotel in the South Western DNO region that signed a flexible procurement contract in February 2026 reduced its agreed capacity to 130 KVA after a six-month load study and saved roughly 1,400 pounds per year on the capacity line alone, with no change to actual consumption. The MIC review is one of the highest-return procurement exercises available to a half-hourly customer; few brokers volunteer it because it does not increase their commission.
Apples-to-apples checklist before signing
The checklist that reduces quote-sheet comparison failures to near zero:
- Confirm the annual kWh used in each quote is the same number, ideally the figure from the most recent annual bill.
- Confirm the standing charge is quoted on the same basis (daily, in pence) for every supplier.
- Confirm whether the CCL is included in the unit rate or shown separately, and treat consistently across suppliers.
- Confirm the VAT band assumed and apply consistently.
- Ask each broker, in writing, for the commission payable; record the response in the quote file.
- Confirm the early-termination fee structure; record in the quote file.
- For HH sites, confirm the KVA capacity charge basis and the ToU band split.
- Run the normalised annual total calculation manually; do not rely on the broker's "total" column.
The work is roughly 30-45 minutes per supplier. The saving per cycle of effort is typically 200-2,000 pounds per year on a microbusiness contract.
What the Ofgem data tells the customer
Ofgem's energy data portal publishes the headline non-domestic price series quarterly, including average prices by consumption band, by region, and by contract type. The Q1 2026 release showed microbusiness fixed-contract electricity unit rates in the high-20s p per kWh on average. A customer presented with a quote significantly above that figure (say 36p per kWh for a similar profile) has a data-backed basis to challenge.
The portal does not name individual suppliers and does not guarantee that any specific customer's profile matches the published average. It does provide a sanity check that lets a customer recognise when a quote is materially out of line with the published market.
Here is where it breaks for less-engaged customers. The Ofgem data is published. The customer must download it, find the right table, and run the comparison. Most microbusinesses do not. The customers who do tend to negotiate from a measurably stronger position.
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
What lines should appear on a complete business energy quote?
A complete quote shows unit rate (p/kWh), standing charge (p/day), assumed annual kWh, CCL treatment, VAT band, contract term, early-termination fee structure, and (for half-hourly sites) the KVA capacity charge and ToU band split. Any missing line is a question to ask the supplier or broker.
How is the broker commission disclosed?
Under the Ofgem TPI rules implemented from December 2024, brokers serving microbusinesses must disclose commission in writing on customer request. The disclosure should show the commission both as pence per kWh in the unit rate and as a total pound figure across the contract.
What is the difference between 20% and 5% VAT on business energy?
HMRC's standard VAT rate on non-domestic fuel and power is 20%. A reduced 5% rate applies to qualifying supply (domestic use, charitable non-business use, or below the de minimis threshold of 1,000 kWh per month for electricity), set out in VAT Notice 701/19.
Does the Climate Change Levy apply to all business energy?
The Climate Change Levy applies to most non-domestic energy supply, with reduced rates for businesses in Climate Change Agreement sectors. The main electricity rate from 1 April 2026 is published on the gov.uk environmental taxes pages.
How is a half-hourly site quote different from a non-half-hourly one?
Half-hourly quotes split the unit rate into time-of-use bands and add separately itemised capacity (KVA), TNUoS, BSUoS, and reactive power charges. Non-half-hourly quotes typically bundle these into a single unit rate. The two products are not directly comparable by unit rate alone.
Where does the Ofgem non-domestic price data come from?
Ofgem's data portal compiles non-domestic price and switching data from supplier reporting under the licence conditions and from settlement-system feeds. The portal publishes the data quarterly, alongside the DESNZ Quarterly Energy Prices statistical release.
Sources
- Ofgem - Energy data portal, Q1 2026 non-domestic price and switching data
- DESNZ - Quarterly Energy Prices statistical release, May 2026
- HMRC - Climate Change Levy main rates from 1 April 2026
- HMRC - VAT Notice 701/19, fuel and power, de minimis threshold and qualifying use
- Ofgem - Non-domestic market review, TPI commission disclosure rules
- Ofgem - Energy advice for businesses, comparing quotes
