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Basic Guide on Understanding Business Electricity

The way businesses are supplied with electricity is different from how they are supplied to households. Since businesses require a large amount of energy to operate, they are provided with contracts that help them reduce their costs on production. Businesses like utility bidder help other businesses find the best deals in the market.

Some businesses are larger than others, and the type of contract they might sign into will be different from a smaller business, which is why the market has a variety of contracts available that businesses can choose from.

Frequently Asked Questions

How to Understand Business Electricity Contracts?

Contracts can be long and confusing. There are many terms and conditions in them that require clarity, as the terminology used can be difficult for some business owners to understand. The first thing to note is the billing period, which is something that can be negotiated with your utility supplier; smaller businesses should try to keep shorter billing periods so that they can keep an eye on their spending.

The second thing to note is the unit rate written in your contract. This will be the price you pay per kilowatt-hour of electricity that is used by your business. This should be as low as possible when you are picking a supplier. This is what differs from one supplier to another and is what most business owners look into. 

You, too, will also have to look into the standing charges on the contract. This is known as the daily fixed cost in your bill, and it covers the maintenance of your meter as well.

If your business is large, then the agreed supply capacity (ASC) is something you must look into as well. ASC is the agreed maximum demand that a business agrees upon receiving from its utility provider. A half an hour period of electricity usage in your billing period can be used by your supplier to judge whether or not you are exceeding your ASC. 

If you are exceeding the capacity allotted to you, then you would overload the system, which could lead to a power cut, or this would be added as extra expenses onto your bills. On the other hand, if you are not reaching your ASC, then your business does not need this much energy, and the amount you may be paying for it is not suitable for your business.

Why Should Businesses Install Smart Meters?

Smart meters are a great investment because they feed accurate information straight to your utility provider and give a better reading than a traditional meter. It also means you do not need to spend extra time deciphering your meters reading as it is already done for you.


Business owners need to be vigilant when it comes to costs associated with utility. Utilities such as gas and electricity can be one of the biggest expenses that a business has to pay for. Thus, reducing it in any manner can be beneficial for the business, and the best way to do this is by signing a business energy contract with utility suppliers.

Photo by Pok Rie from Pexels

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