How to Shop for Business Electricity Rates

How to Shop for Business Electricity Rates

When you’re in business for yourself, business electricity is just one of the things that make it possible to work. You’ve got to shop for great business electricity rates plus set up internet, phone, computers, and maybe an alarm system, and of course hire and manage employees! We’re here to help you understand how to shop for business electricity rates and get the best plan for your business, whether it’s a small or large business. (The rest of it is up to you!) simplifies the process to shop for business electricity rates, bringing you the best plans from reputable electricity providers.

Is Shopping for Electricity Hard?

Business electricity shopping is actually not that difficult, it’s just that you don’t do it very often. And, after all, you’re not in the power business. Electricity is sold as a price per kilowatt hour (kWh). In addition to your electricity supply, you will also have to pay delivery fees from your local Transmission & Distribution Utility (TDU) to get the power to your business. And, depending on the type of meter you have, you may have what’s called a demand charge. A demand charge is a fee based on the highest amount of measured usage you have during any one 15-minute time interval during a month. The demand charge is measured in kilowatts (KW).

Read more about business electricity rates: Business Electricity Basics – Power Up Your Business! >>

Regardless of who your electricity supplier is, your utility delivery fees will remain the same. The one item to focus on is your supply (or energy) price per kilowatt hour charge. Some electricity providers also charge a monthly base charge in addition to a per kilowatt hour rate. You’ll find these details on the electricity facts label (if you are a small commercial customer) or in your contract (if you are a medium or large commercial customer). highlights these details in an electricity plan summary for each plan offered on the site.

What are the Types of Business Electricity Rates?

Most business owners prefer a Fixed Rate Plan. Under a fixed rate, you will pay the same price per kilowatt hour of power regardless of when you use it, or how much you use. This rate, taken in conjunction with your historical kWh usage, will easily allow you to budget your total electricity expenses for your business year.

Another option is an Indexed Rate Plan. An indexed rate plan is one where the price is tied to some other variable or formula to calculate your rate. For example, an indexed rate may be tied to the price of natural gas, or some other published commodity. A more common type of indexed plan is a “time of use” plan. A time of use plan has a different rate for your usage depending on the time of day or day of the week. These plans can be beneficial to businesses that operate in off-hours like nights and weekends.

Renewable Energy or Green Energy is another type of business electricity rate plan. These are typically fixed rate offerings, that include the addition of Renewable Energy Credits or RECs. When you buy a green energy plan, the Retail Energy Provider purchases RECs to offset the carbon produced by the amount of power you use.

Read more about the types of business electricity rate plans >>

Should I go Short Term or Long Term for Business Electricity Rates?

Contracts for business electricity rates can be as short as month to month to as long as 60 months. The best electricity plan for your business depends on you and your business needs.

Many business owners go with a 12 month contract. This fits the annual business planning cycle. It also insures that you aren’t stuck with a big liquidated damage cancellation fee if your company needs to close up shop.

Depending on market conditions and your business needs, a longer term contract of 60 months may give you the lowest price. When the electricity commodity markets are backwardated (meaning wholesale costs for future power are lower than the current cost of power) longer term contracts are more attractive. Electricity commodity markets are currently backwardated, and long term plans offer a lower price per kilowatt hour than short term plans.

Things to consider with a long or short term contract include:

  • Can I afford an early termination penalty if I need to cancel my contract?
  • Am I comfortable committing to a long term contract?
  • Do I want to match my electricity contract to my lease agreement term?

How do I Compare Business Electricity Rates?

As noted above, your meter type determines your TDU delivery rates and whether or not you will have a demand charge. Your TDU delivery charges will be the same regardless of the electricity supplier you choose. The key is focusing on the price per kilowatt hour for supply, or sometimes called the energy charge.

If you are using to shop for your business electricity rates, you can select plans to compare in a handy chart format to narrow your search. Each plan is displayed showing the price per kilowatt hour for supply, the number of months in the term, the type of plan (fixed, variable, index) and the percentage of renewable energy.

Shop for business electricity
When you shop for business electricity, focus on the energy rate per kWh, term, type of plan and percentage green.

What are the Credit Requirements for Business Electricity?

When you buy electricity, you are buying in a “post-pay” agreement. You agree to buy power from a supplier, and they agree to sell it to you and to coordinate delivery to your location. The supplier then issues you a bill for the power and delivery after you have consumed it. Whether you pay them or not, the supplier is on the hook for the power you used and for the delivery charges to get it to you. Because of this, most electricity suppliers will want to run a credit check on your business.

During the enrollment process, you will be asked to provide your business Federal Employer ID number (EIN) or your DUNS Number. If you haven’t been in business long, you may not have been able to establish a credit history. Or, maybe starting a business stretched your resources and you don’t meet the supplier’s minimum credit threshold. Each electricity supplier has a different credit policy. If you don’t meet their minimum credit standards, you may be required to pay a deposit.

There are several options for satisfying a deposit. First, you can pay a deposit, typically equal to 1/5 of your estimated annual usage. Or, if you have had service at that location or a prior location, you may be able to provide a credit history from your current electricity provider showing that you pay on time. Some electricity suppliers make it even easier, simply requiring that you submit 1-2 of your most recent electricity bills to prove that you pay on time.

Read more about building small business credit >>

Let an Expert Shop for Your Business Electricity!

We hope that this has helped give you more confidence on shopping for business electricity rates for your small to medium sized business.  If so… it’s time to get shopping!

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