When it comes to running a business, energy costs can be a major expense. Most energy providers offer plans specifically tailored for businesses — but there’s no one-size-fits-all plan, so make sure you’re getting the right energy deal for your company.
Can I switch my business electricity supplier?
It depends on your state. In regulated states, utility companies control the electrical supply and customers are assigned a utility provider for their designated area. But in deregulated states, companies outside of utilities can own power plants and transmission lines, allowing customers to choose their provider.
Depending on your plan, you may also be charged exit fees for ending your contract early, which may impact your decision to switch.
The following states are deregulated for electricity and allow customers to change providers.
- the District of Columbia
- New Hampshire
- New Jersey
- New York
- Rhode Island
How much does electricity cost per month for a business?
The electrical cost for your business will depend on the providers in your area, the nature of your business and other factors. For example, religious institutions use significantly less power than food service providers. According to Building Owners and Managers Association International (BOMA), the average electrical cost in 2016 for private-sector office buildings was $1.69 per square foot.
For a company that uses 20,000 kWh per year, you might pay anywhere between $1,500 and $5,700 annually, depending on your state and if you utilize power during peak or off hours.
|State||Average electricity rates for businesses (cents/kWh)||Average monthly bill (Usage: 20,000 kWh per year)|
|New Hampshire||15.38 cents||$256.33|
|New Jersey||12.83 cents||$213.83|
|New Mexico||11.20 cents||$186.67|
|New York||16 cents||$266.67|
|North Carolina||9.14 cents||$152.33|
|North Dakota||9.79 cents||$163.17|
|Rhode Island||15.79 cents||$263.17|
|South Carolina||10.35 cents||$172.50|
|South Dakota||9.71 cents||$161.83|
|West Virginia||9.44 cents||$183.83|
|US average||11.07 cents||$184.50|
Estimates in this table are calculated for electricity usage billed at a single rate based on data from the American Public Power Association report from 2019.
Do the number of employees impact my energy bill?
The number of employees in your organization has a significant impact the final cost. We’ve compared business sizes to give you an idea of costs.
|Business size||Number of employees||Average cost (per year)|
|Non-employing businesses||Just the owner||$1107.00|
|Micro businesses||1 – 4||$2214.00|
|Small businesses||5 – 19||$4981.50|
|Medium businesses||20 – 199||$10516.50|
Estimates in this table are calculated for electricity usage billed at a single rate based on the average US rate for electricity in 2019.
How much can your business save when switching energy suppliers?
How much you can save depends on the rates of your old supplier compared to your new supplier, as well as exit fees or other fees you may be charged for switching suppliers or ending your contract early.
The following rates are based on deregulated suppliers in Michigan and do not include exit fees or other associated costs. As before, we estimated 20,0000 kWh of power used per year. Actual savings will vary by state, provider and other factors.
|Old rate ($0.09/kWh)||New rate ($0.082/kWh)||Savings|
Estimates in this table are calculated for electricity usage billed at a single rate based on data from DTE and Consumers Energy in Michigan from 2020.
How do I compare business electricity plans
When sourcing energy for your company, comparing business plans partially depends on how much energy you use and when you use it. For example, a business that operates primarily on the weekends may have different needs than one that operates during the week. A few things to keep in mind:
- Discounts on market usage rates. This is the amount you’re charged per unit of power. The discount may be a limited-time offer, so check the benefits duration and how this corresponds with your contract duration.
- Rates on electricity use. These rates vary depending on your provider and your plan. With a simple general supply plan, these costs are often average rates, ranging between 9.50 and 32 cents per kilowatt hour depending on your state. For other tariffs, such as an on-peak/off-peak plan, you save money if you can shift your usage to weekends and evening energy usage.
- Signup discounts. Some plans offer discounts upon signing up. These may be flat credits that go toward your first bill or percentage discounts that reduce your bills for a limited period.
- Exit fees. These are generally higher for business customers than for residential ones. Also, business contracts are generally longer, meaning there’s a longer period you can be charged. Exit fees for businesses can range anywhere from $0 to $1000 or more.
- Customized plans. Some energy providers offer a wide range of packages to suit their customers, while others offer just one or two plans.
- Flexible payment options. There are many ways to pay your bills, and it often pays to have multiple options with your provider. Check if they offer services such as Apple Pay, direct debit and mail.
- Customer service quality. Some companies may offer special discounts if you sign up for both electricity and gas services simultaneously.
- Duration of contract. Contracts can “lock you in” for anywhere between six months and two years. Leaving prematurely can mean paying an exit fee.
- Accuracy of energy billing. When calculating your electricity usage, your provider can either estimate your usage, potentially overcharging your business, or actually measure it. Investigating the technique employed by your retailer or package.
- Whether they’re available in your area/state. Energy providers do not necessarily operate in all states and counties, and the choice of providers may be limited depending on where your business is located in the country.
How can my business find a cheaper rate?
Again, it will depend on the nature of your business. But here are some of the most important things you can do to save on those power bills:
- Look for discounts. Sign up discounts and discounts to your energy rates might make one provider better than another, at least for a certain length of time. Compare your current plan to others and see if it’s time to switch.
- Get the right contract. Choose whether flat cost power or variable rates are better for how your business uses energy, and pick a contract with a fixed-term that’s the right length for you.
- Check usage calculations. If your provider uses an estimate of energy use to calculate your bill, consider whether a different provider who uses your actual meter readings might lower your costs.
- Consider an energy audit. You can either conduct your own audit or hire an energy assessor if your business is large or complex. Essentially, this involves establishing a baseline of energy usage in your business and tracking changes to it as you make improvements.
- Use appliances efficiently. Make sure your air-conditioning isn’t left on when nobody is around. Install automatic sensor lights that turn off when rooms aren’t in use. Power down computers and unused equipment at the end of the day instead of leaving it on standby.
How do I exit my existing contract?
When you start a new energy contract, your previous one will end. Notify your energy company of your switch date and take note of this to ensure you get billed appropriately for the partial payment period.
If you’re relocating your business and would like to keep your previous provider, contact a representative from your energy supplier.
How can my business reduce energy usage?
- Switch off computers, printers and faxes when you can. Many machines are left on, causing unnecessary drain.
- Install automatic light switches and fans for bathrooms and other rooms that don’t need constant lighting or services.
- Move hot items from cool places and cool items from hot places. For example, if you have a piece of equipment that tends to runs hot, try moving it to a naturally cooler area.
- Close doors and don’t bother to heat or cool unoccupied rooms.
What if I have a complaint about my provider?
Give your provider a call. Who to contact should be listed on your energy bill. Most, if not all, energy bills have a box with points of contact.
If your issue is still unresolved, the next step is to contact your local government. Most states have a public service commission that oversees energy and telecommunication services. Each commission has unique requirements for filing a complaint, such as billing paperwork and evidence of other communications with your provider. Be sure to refer to the specific commission in your state for what you’ll need to provide.
In deregulated states, energy providers are businesses and you may be able to file a complaint with the Better Business Bureau to help resolve your issue.
If your business is located in a deregulated state, switching energy suppliers could save you money every year. But be mindful of exit fees and other costs that may be associated with ending your contract earlier or switching providers. To ensure you’re getting the best deal for your company, knowing how to read your electric bill is a great place to start.
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