Business Energy Prices Explained

Why Your Business Energy Bills Don’t Follow the Price Cap

With energy prices constantly in the news, many business owners wrongly assume their bills should follow household price trends. Business rates work very differently and waiting for them to “catch up” with the price cap could cost you.

One of the biggest misconceptions is that the domestic price cap is related to business rates. It doesn’t and relying on it can cost your business more in the long run.

In this blog, we’ll break down the difference between the two, explain why business rates don’t follow the cap, and show you how to take control of your energy costs.

Understanding the Domestic Price Cap

Ofgem introduced the domestic price cap to protect households from unfairly high prices, particularly those on standard variable tariffs. It sets a limit on how much suppliers can charge per unit of gas or electricity.

Here’s how it works:

• • It only applies to households, not businesses

• • It’s reviewed every three months

• • The rate is based on wholesale market data from the previous six months

This means the cap is always behind live market prices. By the time it reflects a drop, business rates may have already risen again. Even for households, it doesn’t guarantee lower bills – it only limits the maximum charge. It has no role in business energy pricing.

How Business Energy Rates Work

Business energy follows an entirely different model. It’s tied closely to the live wholesale market and shaped by a mix of business-specific factors. Unlike domestic rates, which are often standardised, business quotes vary widely.

Here’s what makes business energy pricing unique:

• • No price cap, businesses are not protected from spikes.

• • Quotes reflect live market data, not historical averages.

• • Rates are based on your contract length, usage, credit score, location and even meter type.

• • Rates are typically fixed at the time of contract and stay locked in

The wholesale market itself is influenced by global supply and demand. Prices move based on gas and oil trends, political events, extreme weather, and even exchange rates.

Suppliers buy energy in advance, so your quote reflects their future cost predictions, not today’s prices. So even in a falling market, volatility or uncertainty can still push quotes up.

That’s why timing matters so much and why expert advice can make all the difference.

The Graph Tells the Story

Real-World Data - Business Prices Move Faster

Our infographic comparing domestic and business rates shows how separate these two markets are:

• • In early 2021, wholesale prices began to rise. Business rates moved quickly, while the domestic cap stayed flat

• • By late 2021, Ofgem adjusted the cap, but businesses had already been paying more for months

• • In 2022, business rates surged due to global instability and supply issues. The domestic cap rose much later

• • In mid to late 2023, business rates started to fall. The domestic cap was still rising before eventually levelling out

Both markets react to similar global influences, but the speed is very different. Business rates respond in real time. The domestic cap moves slowly based on historic data. Waiting for it to fall can mean missing the point when the business market is at its best.

Why the Misunderstanding Costs Businesses Money

When businesses assume their rates will drop in line with the domestic cap, they often delay renewing. The wholesale market can change direction overnight, meaning the best deals are missed.

Delays can lead to locking in at higher rates or falling onto out-of-contract rates, which can be two to three times higher than the market average. Many don’t realise until it’s too late.

Taking Control of Your Energy Strategy

There’s no single solution for business energy, but the best results come from timing it right.

If your contract is due for renewal in the next six to twelve months, now is the time to plan. Our free Triage Review gives you a complete business energy health check, looking at your usage, current deal, and market conditions so you can move forward with confidence.

Here’s what we recommend if you want to make the smartest move:

• • Track wholesale prices and market trends so you can lock in when rates dip, not just at renewal

• • Review your contract, meter type, and profile class – these directly affect your rates and charges

• • Assess your risks, including rollover clauses, verbal agreements, and hidden broker fees

Triage is built for this – a full strategic review tailored to your business, contract, and the market.

How Switch365 Can Help

Our market analysts, consultants, and pricing experts work with businesses of all sizes to secure the right deal at the right time.

Triage is our free, expert-led review that gives you a clear, complete picture of your energy setup and how it can be improved.

Here’s what we cover:

• • Cost-saving opportunities you may not know about

• • Contract and billing issues that could be costing you

• • Timing strategies to secure better rates

• • Risks linked to your supplier, broker, or setup

• • Practical steps to improve efficiency and reduce waste

It’s simple, tailored to your business, and delivered by people who know the market inside out.

Next Steps for Smarter Business Energy Decisions

The domestic price cap doesn’t apply to business energy, and relying on it could leave you overpaying or missing the window to lock in a better deal.

When you understand how business energy pricing works, you can make smarter decisions about your contract, your costs and your timing.

Book your free Triage Review and take back control of your energy costs today, with expert support and no pressure.