Very Expensive Commercial Electricity

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marsaday

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Does anybody know why commercial electricity is much more expensive than residential electricity ?
Also why has domestic electricity roughly doubled in price since March '21( expensive as that is) whilst commercial electricity has increased by 350-400% in that period.
I would imagine the thinking is that electricity is an essential service in a home . However , if commercial electricity rates stay as they are or most likely increase again , businesses will fail placing a further burden on the tax payer ( the aforementioned residential customers ) to pay the Social Welfare entitlements to the people who have lost their jobs because of the collapsed companies who can't pay these costs.

I'm at loss to know why this discrepancy in the cost of energy has not been questioned in any media or news programmes and why the tackling of this problem is not being brought up in relation to the upcoming budget .

Anybody have any opinions or answers on this ?
 
Often wondered the same thing.
Is it to do with the type of power coming through the lines .Do some companies use , 3 phase electricity and that makes it dearer.
 
Commercial electricity use is primarily in daytime where the highest prices are charged by generation.

You can find generation price sites that show you the day ahead price of electricity. At present in the UK some 5pm prices are 70p+ per unit. At 10pm it drops to about 15p.

Electricity suppliers will buy ahead and hedge, but if there is excess demand they have to buy on the open market.

Rather than change your unit prices every hour of every day they work out an average cost.


In the UK prices are going to soar out of control to scary figures. This is because the regulator there prevents hedging past 3 months except for a very small amount of electricity or gas. This means that the cap tomorrow for domestic users will be close to 50p - and most will charge this. Next January it could jump to 70p.

Business will be higher.


Here they are not restricted on hedging. So in a way we are "lucky", but I suspect that a huge number of hospitality businesses in the UK will go bust and some here will also find it difficult to continue.

Scary times.
 
Interesting stuff , peemac. What you’re outlining is that commercial electricity is dearer partly because the use is mainly daytime and is influenced by high generation costs at that time of the day. However having said that ,electricity must be the only service or product in the world that is more expensive , the more you use. No bulk discount there.
I can’t think of anything else that is not cheaper in bulk Purchase.

Having said that , what about the small businesses accountancy practice , solicitor , small retail shop , barber , bike shop , photographer etc . In their case they are using far less daytime power than an average home , but are paying four times the amount. , The PSO levy and standing charges are all much higher as well.

To be honest , my worry is that the government haven’t remotely or yet , copped on to the fact that commercial electricity rates is propelling out of control , thinking only that they have mirrored the domestic market increase ( bad enough as they are)

Don’t want to sound like a doomsayer but this is very worrying moving in to the winter period.
 
There's less public and political blowback from commercial customers when prices increase. That's why.
 
Purple said:
There's less public and political blowback from commercial customers when prices increase. That's why.
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There mightn't have been up to now Purple but I'd say that's all about to change in my opinion when business customers start getting their September and October bills. Its simply not sustainable.
 
Sharpie said:
There mightn't have been up to now Purple but I'd say that's all about to change in my opinion when business customers start getting their September and October bills. Its simply not sustainable.
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Our unit price has gone up 60% in the last 2 years and is set to double again. We are a significant user so that runs well into the hundreds of thousands a year. There are minimal grants for commercial users to invest in things like Solar or consumption reduction measures such as LED lighting.
 
The grants for LED lighting installation are tiny , the installation Capital cost is huge , and from speaking to other business owners the savings to be made by installing LED Lights are minimal anyway and hardly worth the effort.
 
marsaday said:
Interesting stuff , peemac. What you’re outlining is that commercial electricity is dearer partly because the use is mainly daytime and is influenced by high generation costs at that time of the day. However having said that ,electricity must be the only service or product in the world that is more expensive , the more you use. No bulk discount there.
I can’t think of anything else that is not cheaper in bulk Purchase.

Having said that , what about the small businesses accountancy practice , solicitor , small retail shop , barber , bike shop , photographer etc . In their case they are using far less daytime power than an average home , but are paying four times the amount. , The PSO levy and standing charges are all much higher as well.

To be honest , my worry is that the government haven’t remotely or yet , copped on to the fact that commercial electricity rates is propelling out of control , thinking only that they have mirrored the domestic market increase ( bad enough as they are)

Don’t want to sound like a doomsayer but this is very worrying moving in to the winter period.
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Small business is not paying 4 times what homes are paying. I have a small business.

I'm still on a fixed rate, but expected new rate in November is about 50c a unit. I expect my domestic rate to be over 30c by then even at max discount.

Gas is at 10 times what it was 18 months ago on the commodity markets.

In my business (retail) we literally are looking at every item that uses power and getting into the habit of switching off.
Display lights will be more spread out. Some will only be turned on after 11 as very few shoppers before that

Heating has changed - 4 X 28w extractor fans will take air from the highest part of the building (heat rises) and fed back down into packing areas and office areas.

And the day of preheating the building before staff come in are gone.

I still am budgeting circa 10k extra for light and heat in the next 8 months and I will have to increase pay levels and deal with possible sales slowdown.

But it's restaurants and bars that are really going to suffer, and the stress on those operators will be immense and they will not be able to do many changes.
 
I see the Sunday 'Newspapers have finally addressed the issue of expensive commercial energy and the possibility of business closures this morning. From past experience the Sunday paper headlines set the political agenda for the following week ... here we go now... round the clock intensive political questioning and analysis about 12 months late.
 
Sharpie said:
The grants for LED lighting installation are tiny , the installation Capital cost is huge , and from speaking to other business owners the savings to be made by installing LED Lights are minimal anyway and hardly worth the effort.
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We installed them at the beginning of this year. I'm estimating a 4.5 year return on investment. It would be 2.5 years if the lighting output had remained the same but the output is far higher and the place is much brighter now.

The ROE on Solar is longer. Unless you are putting in a large array the ROE is much longer.
 
peemac said:
Small business is not paying 4 times what homes are paying. I have a small business.

I'm still on a fixed rate, but expected new rate in November is about 50c a unit. I expect my domestic rate to be over 30c by then even at max discount.
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What are you paying at the moment?
peemac said:
Heating has changed - 4 X 28w extractor fans will take air from the highest part of the building (heat rises) and fed back down into packing areas and office areas.
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That's a great idea!
peemac said:
And the day of preheating the building before staff come in are gone.

I still am budgeting circa 10k extra for light and heat in the next 8 months and I will have to increase pay levels and deal with possible sales slowdown.
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I estimate that all else being equal we'll see €80-€100k added to our power costs in the next 12 months.
peemac said:
But it's restaurants and bars that are really going to suffer, and the stress on those operators will be immense and they will not be able to do many changes.
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Agreed. They'll be hit with increased costs all across the board.
 
@Purple
i'm paying 16.07c per unit. Fixed to end Feb next - I thought I had changed nov 2020, but seems I didn't actually make the change til feb.

Unfortunately gas is a different story, so I'll be doing electric heating til end feb and thereafter they'll all have to wear costs inside :)
 
peemac said:
@Purple
i'm paying 16.07c per unit. Fixed to end Feb next - I thought I had changed nov 2020, but seems I didn't actually make the change til feb.

Unfortunately gas is a different story, so I'll be doing electric heating til end feb and thereafter they'll all have to wear costs inside :)
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You must be in the second year of a two year contract or something ,peemac. Fair play to you. That's an incredibly low price.
 
peemac said:
@Purple
i'm paying 16.07c per unit. Fixed to end Feb next - I thought I had changed nov 2020, but seems I didn't actually make the change til feb.

Unfortunately gas is a different story, so I'll be doing electric heating til end feb and thereafter they'll all have to wear costs inside :)
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That's good. We went from 18cent to 26cent but that runs out in 10 months.
I'm looking at large capacity battery storage that we can charge at night and use during the day. I'm getting 87KW of Solar in but that'll only scratch the surface of what we use. I'm looking at how we can charge a battery unit at the weekend from that as well. It's all down to cost and return on investment. The company we are working with is very good so that helps.
 
Sharpie said:
You must be in the second year of a two year contract or something ,peemac. Fair play to you. That's an incredibly low price.
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Yep, took a 2 year contract. Not huge users as all lighting is led and only PC's and staff kitchen being the rest.

But this year the heating will utilise electric heaters as I'm on a variable gas price and it's 15.22c a unit and I expect it to go further (was 4.1c 2 years ago)

Big building - warehouse style height 6,400sq ft.
 
newirishman said:
Arguably good news despite of course a disaster for the business and the employees.

planting something that doesn’t require extensive heating might be a better idea I mean,
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I agree.

Back in my youthful childhood (4 decades ago) tomatoes were expensive in the winter months as were many seasonal fruits and veggies.

So they were not purchased and meals were made with well priced seasonal produce.
 
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