The short answer: it depends entirely on what you are paying now. A small business on deemed rates could save over 40%. One on a rolled-over contract might save 27%. Even a business that actively negotiated its last deal could still be overpaying by 15%.
Here are the actual numbers - drawn from government pricing data and our own case studies - so you can estimate where your business sits.
TL;DR: Key Takeaways
- Your starting position determines everything. A 20,000 kWh/year business on deemed rates could save around £3,475/year (40.8%). On a rolled-over contract, that drops to around £1,910 (27.4%). On a sub-optimal fixed deal, around £891 (15%).
- Smaller businesses pay dramatically more per kWh. Department for Energy Security and Net Zero (DESNZ) (opens in new tab) data shows very small businesses pay 41.15p/kWh on average - a 101% premium over extra large consumers at 20.49p/kWh.
- Only around 40% of your bill is actual energy. The rest is non-commodity charges - network costs, environmental levies, and policy charges that your supplier cannot control.
- Gas follows the same pattern. Deemed rate penalties are just as punishing for gas, and your gas and electricity contracts often expire at different times - meaning you could be overpaying on one without realising.
- 10% of UK businesses have never switched energy supplier. Another 18% are sitting on out-of-contract rates right now. If that is you, switching is the single highest-impact cost reduction available.
What Determines Your Savings?
There is no universal answer to “how much will I save?” because it depends on three things:
- Your current contract status - Are you on a competitive fixed deal, a rolled-over contract, or deemed rates? These are different things (more on that below), but all three sit at very different price points.
- Your consumption volume - Larger businesses get better rates per kWh simply because they buy more. A business using 150,000 kWh/year will pay significantly less per unit than one using 20,000 kWh/year.
- When you last switched - Energy prices move constantly. A deal that was competitive in 2023 may be well above market rates in 2026.
The biggest variable is your contract status. It is worth understanding the distinction:
- Deemed rates apply when there is no contract in place at all - typically when a business moves into premises and starts using energy before signing a deal, or when a contract expires and no renewal (automatic or otherwise) kicks in. These are the most expensive tariffs a supplier publishes.
- Rolled-over contracts happen when your supplier automatically renews your contract at the end of its term because you did not respond to their renewal notice. There is a contract in place, but it is unlikely to be the supplier’s best available rate.
- Out-of-contract rates is a catch-all term some suppliers use for post-contract pricing. Depending on the supplier, this may technically be deemed or a rollover arrangement.
In practice, both deemed and rolled-over rates are significantly above competitive market rates - often 40-80% more - and many businesses do not realise which one they are on.
What UK Businesses Actually Pay: DESNZ Size Band Data
DESNZ publishes quarterly pricing data (opens in new tab) broken down by business size. Here is what Q3 2025 data shows for non-domestic electricity prices:
| Size band | Annual consumption | Average price (p/kWh) |
|---|---|---|
| Very small | Up to 20,000 kWh | 41.15 |
| Small | 20,000 - 499,000 kWh | 27.19 |
| Small/medium | 500,000 - 2m kWh | 24.44 |
| Medium | 2m - 20m kWh | 22.09 |
| Large | 20m - 150m kWh | 20.66 |
| Extra large | 150m+ kWh | 20.49 |
Source: DESNZ Quarterly Energy Prices, Table 3.4.1 (opens in new tab), Q3 2025. These are all-in average prices calculated using DESNZ methodology - they include standing charges, non-commodity charges, and all other costs divided by total consumption. They do not represent the unit rate you see on your bill, but they are the best available measure of total cost per kWh by business size.
A note on DESNZ size bands: These are Eurostat statistical classifications, not everyday definitions. DESNZ’s “Small” band stretches up to 499,000 kWh/year - which includes businesses most people would call medium-sized. Most UK SMEs with fewer than 10 employees will fall into the “Very small” band (under 20,000 kWh/year). If that is you, 41.15p is your benchmark - and it is likely inflated by the high proportion of very small businesses sitting on deemed rates.
The pattern is stark. Very small businesses - the ones with the least time and resource to manage energy procurement - pay the most per unit. The 41.15p average for the smallest band includes businesses on deemed rates, rolled-over contracts, and competitive fixed deals all blended together. If you are on deemed rates, your actual rate is likely well above that average.
This is not because suppliers are charging small businesses more for the same product. It is because smaller businesses are less likely to engage with the procurement process. Energy is jargon-heavy. Renewal letters arrive talking about “deemed rates” and “out-of-contract tariffs” - terms that mean nothing if you are a hairdresser or a cafe owner focused on running your business. Some owners interpret going “out of contract” as a good thing (no lock-in), when in energy it means the opposite - you have just moved onto the most expensive tariff your supplier publishes. Others simply do not know what a competitive rate looks like, so they have no benchmark to realise they are overpaying. It is not incompetence - it is a rational response to an industry that has made itself unnecessarily opaque.
What is a competitive electricity rate for your business?
Use the DESNZ averages as a rough benchmark, but remember they include businesses on expensive default tariffs pulling the average up. A competitively sourced fixed contract should beat these averages:
- Very small business (up to 20 MWh/year): If you are paying above 30p/kWh, you are likely overpaying. A competitive fixed deal should be in the 24-28p/kWh range.
- Small business (20-499 MWh/year): Anything above 25p/kWh warrants investigation. Competitive rates sit around 21-24p/kWh.
- Medium business (500+ MWh/year): You should be below 22p/kWh. If not, your procurement process needs revisiting.
These benchmarks assume a standard fixed-term contract without embedded broker commission. If your contract was arranged through a broker, the rate may include 2-4p/kWh in commission that you could avoid on your next renewal.
Why the gap matters
That 101% premium between the smallest and largest consumers is not primarily about wholesale energy costs. The wholesale price is broadly similar regardless of how much you buy. The difference comes from:
- Non-commodity charges being a higher proportion of smaller bills
- Broker commissions being embedded in unit rates (typically 2-4p/kWh for SMEs)
- Less competitive procurement - small businesses are more likely to accept the first quote or roll onto default rates
- Standing charges hitting harder on lower-usage sites
Three Switching Scenarios: Real Numbers
To make the savings tangible, here is what a typical small business using 20,000 kWh of electricity per year could save under three common scenarios. We are using 24p/kWh as the competitive benchmark - broadly in line with DESNZ data for the small band.
Scenario 1: Switching from deemed rates
| Before | After | Saving | |
|---|---|---|---|
| Unit rate | ~41.4p/kWh | ~24p/kWh | -17.4p/kWh |
| Annual cost (unit rate only) | ~£8,280 | ~£4,800 | ~£3,475 |
| Saving | ~40.8% |
This is the highest-impact scenario. If your contract has expired and you have not actively renewed, your supplier has almost certainly moved you onto their most expensive published tariff. The savings here are real and immediate - and there are no exit fees because you are already out of contract.
We have seen this play out directly. Dream Looks Boutique in Marylebone had been on EDF deemed rates for two years, paying 38.6p/kWh. They switched to a competitive 3-year fixed deal at 22.31p/kWh (including our 1p/kWh transparent fee) - a 46% reduction that saves them £1,307 per year. Their standing charge dropped 64% too.
Scenario 2: Switching from a rolled-over contract
| Before | After | Saving | |
|---|---|---|---|
| Unit rate | ~33p/kWh | ~24p/kWh | -9p/kWh |
| Annual cost (unit rate only) | ~£6,600 | ~£4,800 | ~£1,910 |
| Saving | ~27.4% |
Rolled-over contracts sit between deemed rates and competitive fixed deals. Your supplier may have automatically renewed you onto a new contract, but it is unlikely to be their best available rate.
Ofgem’s rules (SLC 7A (opens in new tab)) require suppliers to send microbusinesses a renewal notice 60-120 days before contract end. If you do not respond, they can auto-roll you onto a new contract for a maximum of 12 months - but you can terminate at any time with no notice period and switch away.
There is a wrinkle worth knowing about. If you previously used a broker who obtained a Level 2 Letter of Authority (LOA), that broker may have the right to negotiate and sign new contracts on your behalf - including auto-renewals. This means you could be rolled onto a new contract (potentially with embedded broker commission) without ever being involved in the decision. If you have used a broker in the past, it is worth checking whether they still hold an active LOA on your supply.
Scenario 3: Switching from a sub-optimal fixed deal
| Before | After | Saving | |
|---|---|---|---|
| Unit rate | ~28p/kWh | ~24p/kWh | -4p/kWh |
| Annual cost (unit rate only) | ~£5,600 | ~£4,800 | ~£891 |
| Saving | ~15% |
Even if you actively chose your current deal, it may not have been the most competitive option at the time - especially if a broker arranged it and embedded commission in the rate. Market rates also shift between contract signings. A deal locked in at 28p/kWh during a price spike may look expensive now.
Important note: These scenarios use unit rates only. Total savings will also depend on changes to your standing charge, contract length, and any pass-through charges. The directional savings are accurate, but your actual numbers will vary based on your specific supplier and tariff.
Where Your Money Actually Goes
Understanding why your bill is so high means understanding what you are actually paying for. Non-commodity charges - everything on your bill that is not the wholesale energy itself - account for around 60% of a typical commercial electricity bill (opens in new tab). The exact split varies by contract type, region, and time period, but for most SMEs the wholesale energy component is the minority of the total cost.
These charges break down into:
- Network charges (DUoS, TNUoS) - the cost of moving electricity through the grid to your premises
- Environmental and policy costs (Renewables Obligation, Contracts for Difference, Feed-in Tariffs) - funding the UK’s transition to clean energy
- Climate Change Levy - a government tax on commercial energy consumption
- Balancing costs (BSUoS) - keeping supply and demand matched in real time
- Capacity market charges - ensuring enough generation capacity exists
- Supplier margin - the supplier’s profit and operating costs
These charges are largely set by regulators and network operators. Your supplier passes them through. This matters because when you compare quotes, the unit rate you see already has these charges baked in - which is why your rate is so much higher than the wholesale price you see reported in the news.
What you can control through switching is the supplier margin and any broker commission embedded in your rate. On a 24p/kWh rate, the wholesale energy component might be around 8-9p - the rest is non-commodity charges and margin.
How Much Can You Save Switching Business Gas?
The savings scenarios above focus on electricity because the data is clearest and the non-commodity charges are most complex. But gas follows similar patterns - and the same behavioural traps apply.
DESNZ publishes equivalent quarterly pricing data for non-domestic gas (opens in new tab). The size band premium exists for gas too, though the gap is smaller because gas has a simpler cost structure - a higher proportion of the bill is wholesale energy and the non-commodity charges are lower.
The key differences:
- Gas non-commodity charges are lower as a proportion of the total bill. Network charges (gas transportation) are simpler than electricity distribution.
- The Climate Change Levy applies to gas too but at a lower rate than electricity.
- Deemed rate penalties are just as punishing. If your gas contract has expired, you are almost certainly overpaying by a similar margin to electricity.
- Gas and electricity contracts often expire at different times, meaning you could be on a competitive electricity deal but deemed gas rates (or vice versa). Check both.
If your business uses both fuels, switching both at the same time can simplify procurement - but do not let one delay the other. If your electricity contract is competitive but your gas is on deemed rates, switch the gas now.
Why Most Businesses Overpay
If the savings are this clear, why do so many businesses stay on expensive tariffs? The data suggests it is largely about inertia, not choice.
According to Ofgem’s 2024 non-domestic research (opens in new tab):
- 10% of UK businesses have never switched energy supplier
- 18% are currently on out-of-contract rates - deemed or rolled-over tariffs that are significantly above market
- 45% of microbusinesses are on default tariffs rather than actively chosen contracts
The reasons are predictable - and they have nothing to do with business owners being careless or suppliers deliberately overcharging. Business owners are focused on the things they are good at - running a salon, managing a restaurant, fitting kitchens. Energy procurement is a jargon-heavy process that rewards the kind of market knowledge most people simply do not have time to develop.
Contracts expire without anyone noticing. Renewal letters arrive talking about “deemed tariffs” and “out-of-contract rates” - terms that mean nothing if you have never worked in energy. Some owners interpret going “out of contract” as freedom from a lock-in, when in practice it means the exact opposite: you have just been moved onto the most expensive tariff available. Others receive quotes from brokers and have no way to tell whether 28p/kWh is competitive or inflated with commission.
There is also a benchmarking gap. If you have never checked your rate against DESNZ published data (opens in new tab), you have no reference point. You might be paying 35p/kWh and assume that is normal for your size band - when the competitive rate is closer to 24p.
The CMA’s energy market investigation (opens in new tab) identified these behavioural barriers years ago. Ofgem’s Non-Domestic Market Review (opens in new tab) introduced new protections in 2024 - including extending the Standards of Conduct to all business sizes and requiring TPI commission disclosure - but they do not solve the fundamental inertia problem.
What to Do About It
Knowing the numbers is useful. Acting on them is what saves money. The traditional route is to call a broker - but brokers typically add 2-4p/kWh in commission to your rate, which eats into the savings you have just read about. Here is how to do it yourself.
1. Check your current rate
Find your most recent electricity bill. Look for your unit rate in pence per kWh and your standing charge in pence per day. If you cannot find them, your MPAN number will be on the bill - you can use it to request a quote comparison. Do the same for gas using your MPRN.
2. Determine your contract status
Is your contract still active, or has it expired? If you do not know, that is a strong signal you may be on deemed rates. Check for a contract end date on your bill or in correspondence from your supplier. Remember to check both electricity and gas - they often expire at different times.
3. Benchmark against your size band
Compare your rate against the DESNZ quarterly averages (opens in new tab) for your consumption level. If you are using around 20,000 kWh/year and paying more than 30p/kWh, there is almost certainly a better deal available.
4. Get quotes - and know what you are paying for
When comparing quotes, look at the total annual cost - not just the unit rate. Standing charges vary significantly between suppliers, and a lower unit rate with a higher standing charge can cost more overall for low-usage sites.
Since October 2024, suppliers must disclose TPI commission on contract and quote documents - shown as a pence-per-kWh figure. But here is the catch: many brokers only let this appear on the contract itself, and it is not always obvious to spot among the other terms. By the time you see it, you may have already committed.
The better approach is to ask the broker upfront, before they run any quotes: “What is your commission in pence per kWh, and what is the total commission over the contract term?” You are entitled to know. If they will not answer clearly, that tells you something. A quote showing 26p/kWh with 3p/kWh commission means the underlying supplier rate is 23p/kWh - and you could potentially get close to that by going direct or using a transparent platform.
5. Switch
The switching process itself takes about 5 working days. Your supply is never interrupted - only the billing changes. If you are on deemed rates, there are no exit fees and no notice period required. You can start saving immediately.
This is what Meet George is building
The steps above work - but they take time most business owners do not have. That is why we are building a self-service platform that does it for you:
- Upload your bill - we extract your rates, consumption, and contract status automatically
- See live quotes from multiple suppliers in one place - no sales calls, no chasing
- Compare and sign online - your new contract, done in minutes
- Transparent 1p/kWh fee - no hidden broker commission, no markup on your rate
We are not brokers. We do not earn more by steering you to a particular supplier. Our fee is the same regardless of which deal you choose.
Join the waitlist - we are launching in Q1 2026 with 20+ supplier partners.
This article uses DESNZ Q3 2025 pricing data and our own case study data from completed switches. The savings scenarios are illustrative benchmarks for a 20,000 kWh/year business and use unit rate comparisons only. Your actual savings will depend on your specific consumption profile, location, meter type, and contract terms. Non-commodity charge proportions vary by contract type, region, and time period - the approximate 60% figure is based on Ofgem wholesale market indicator data and industry analysis of the GB commercial electricity cost stack.