Business Electricity Tariffs Explained: 9 Types (2026)

Last updated: 28 October 2026

Which business electricity tariff should you be on? For most small businesses, care homes and HMO landlords, a fixed tariff is the safest choice: in October 2026, the average fixed quote for a micro business was 28.4p per kWh with a 58.0p daily standing charge, about £3,052 a year at 10,000kWh before VAT, according to Bionic’s supplier panel. Deemed and out-of-contract rates are the expensive defaults you land on when no deal is agreed. Business electricity has no official cap on prices, so the type of contract you sign decides how much you pay and how easily you can leave. This SwitchSquid guide explains every common tariff type in plain English, shows how they compare in one table and works through two examples, for an HMO and a care home. If you get quotes through our form, we may be paid by the supplier you choose; the quote service is free to you.

Sources: Ofgem, get a business energy contract, Bionic business electricity rates, October 2026 and WeSave latest business electricity rates, all checked on 28 October 2026.

Business electricity tariffs at a glance

Ofgem lists the main contract types business suppliers use, and broker panels add a few more you will see on quotes. Not every supplier offers every type. Here is how they compare.

Tariff descriptions are based on Ofgem’s business contract guidance, with pass-through, time of use and blend and extend as described by Bionic, checked on 28 October 2026. Your own contract terms always take priority.

Fixed tariffs: what you pay in October 2026

Because there is no official limit on business electricity prices, the best guide to a fair fixed rate is what broker panels are being quoted. Bionic’s figures for 1 to 12 October 2026, including its maximum commission and excluding VAT, were:

• Micro (5,000 to 15,000kWh a year): 28.4p per kWh and 58.0p a day.

• Small (15,000 to 25,000kWh): 27.2p per kWh and 118.9p a day.

• Medium (25,000 to 55,000kWh): 27.7p per kWh and 90.1p a day.

• Large (over 55,000kWh): 26.1p per kWh and 173.0p a day.

WeSave publishes a different view: the cheapest indicative one-year fixed unit rates it could find in October 2026, which were 25.60p per kWh for businesses using under 5,000kWh and 24.551p for 5,000 to 49,999kWh. The gap between the cheapest and the average shows why comparing quotes matters. For more on rates by size, see our micro business electricity prices and business electricity prices per kWh guides.

Unit rate or standing charge: why the lowest rate is not always cheapest

Every business electricity tariff has two parts: a unit rate per kWh and a daily standing charge. Bionic’s October supplier snapshot, based on a business using 9,234kWh a year, shows how much the balance between them matters:

• SSE: 23.6p per kWh, the lowest unit rate on the list, but 310.7p a day standing charge. That is about £3,313 a year at 9,234kWh.

• EDF Energy: 28.3p per kWh and 60.8p a day, about £2,835 a year at the same usage.

• Yu Energy: 25.4p per kWh and 158.9p a day, about £2,925 a year.

• E.ON Next: 30.9p per kWh and 78.3p a day, about £3,139 a year.

For this small user, the tariff with the lowest unit rate costs almost £480 a year more than one with a higher rate and a low standing charge. High-use sites, such as larger care homes, are the opposite: the unit rate dominates. Always multiply your own yearly kWh by the unit rate and add 365 days of standing charge. Our business electricity standing charge guide explains the charge in more detail.

Deemed, out-of-contract and rollover: the defaults to avoid

Three tariff types are not really choices. They are what happens when nothing has been arranged.

• Deemed rates apply when you take on premises without agreeing a contract, or when your supplier goes out of business. Ofgem says they are usually higher than negotiated rates. Landlords taking on a new HMO and care groups buying a home are most at risk. See our deemed business electricity rates guide.

• Out-of-contract rates apply when a fixed term finishes and you have not agreed a new deal. Ofgem says they are usually more expensive than fixed contracts. Our out-of-contract business energy guide covers what to do.

• Rollover or evergreen contracts renew automatically, usually for 12 months and possibly at a higher rate. If you are a microbusiness, your supplier must give you renewal prices before your contract ends, and on evergreen contracts it cannot ask for more than 30 days’ notice.

The fix is the same for all three: know your contract end date and get quotes well before it. Bionic notes that switching windows usually open up to six months before your deal ends, and a non-domestic switch can take around six weeks.

Are you a microbusiness? It changes your protections

Ofgem says you are a microbusiness if you have fewer than 10 employees and turnover or a balance sheet of no more than £2 million, or if you use up to 100,000kWh of electricity or 293,000kWh of gas a year. Most HMOs and many small care homes qualify on usage alone.

Microbusinesses get clear contract information and renewal prices before the end date. On evergreen contracts, suppliers cannot ask for more than 30 days’ notice and must acknowledge a request to end the contract within 5 working days. They can also take unresolved complaints to the Energy Ombudsman. There is no cooling-off period on business energy contracts, so read the principal terms before you agree. Our microbusiness energy rights guide has the full list.

Worked example 1: an eight-bed HMO

Take an eight-bed HMO where the landlord pays for the electricity, using 12,000kWh a year. It sits in Bionic’s micro band and is a microbusiness on usage.

• At Bionic’s micro average fix: 12,000kWh at 28.4p is £3,408, plus 58.0p a day (£211.70), so about £3,620 a year before VAT.

• At WeSave’s cheapest indicative one-year rate: 12,000kWh at 24.551p is about £2,946 on units alone, around £462 less than the average before standing charges.

For a landlord, the saving from comparing is real money, and so is avoiding deemed rates when you take on a new property. Tenants’ domestic supplies can also qualify for a lower VAT rate if your supplier knows about them; our HMO electricity VAT guide explains how. See also our HMO landlord energy page.

Worked example 2: a care home using 80,000kWh

Now take a care home using 80,000kWh of electricity a year. It is in Bionic’s large price band, but still a microbusiness under Ofgem’s usage test because it uses less than 100,000kWh.

• At Bionic’s large-band average fix: 80,000kWh at 26.1p is £20,880, plus 173.0p a day (£631.45), so about £21,511 a year before VAT.

• Every 1p per kWh on the unit rate is worth £800 a year at this usage, which is why care homes should prioritise the unit rate over the standing charge.

Care homes with heavy laundry and kitchen loads may also benefit from a time-of-use tariff if they can move some use to cheaper hours, but only if the quote shows the saving on your actual pattern of use. Our care home renewal checklist, care home energy saving guide and care home energy page go further.

Fit summary

• Choose a fixed tariff: you want budget certainty and your usage is fairly steady, which covers most HMOs and care homes.

• Consider time of use: you have a smart or half-hourly meter and can move real load to cheaper hours.

• Consider a variable deal: you expect to move, sell or close within a year.

• Act now: you are on deemed, out-of-contract or rollover rates, or your contract ends in the next six months.

Want a second opinion on a quote? Squid AI, SwitchSquid’s AI assistant, can help you turn a unit rate and standing charge into a yearly cost.

Important conditions

• Bionic’s figures are panel averages for 1 to 12 October 2026, including its maximum commission and excluding VAT. They are not quotes.

• WeSave’s cheapest rates are indicative one-year fixed rates for October 2026; its averages are based on two-year fixes from 5 October 2026.

• Business energy contracts have no cooling-off period. Prices depend on your meter, usage, location and a credit check.

• VAT and Climate Change Levy treatment depends on how each supply is used; confirm with your accountant.

• Our form is for business premises and non-domestic meters only.

FAQ

What are the main types of business electricity tariff?

The main types are fixed, variable, flexible, deemed, out-of-contract and rollover or evergreen contracts, according to Ofgem. Brokers also offer fixed with pass-through, time of use and blend and extend deals. Most small businesses are best on a fixed tariff.

What is the cheapest business electricity tariff?

There is no single cheapest tariff, because prices change daily and depend on your usage. In October 2026, WeSave’s cheapest indicative one-year fixed rate was 24.551p per kWh for businesses using 5,000 to 49,999kWh. Compare the total yearly cost, including the standing charge.

Is a fixed or variable business electricity tariff better?

A fixed tariff gives certainty for the whole term, which suits most HMOs, care homes and small businesses. A variable tariff can be cheaper if prices fall and is easier to leave, so it suits businesses that may move or close soon.

What is a deemed business electricity tariff?

A deemed tariff is what you are charged if you start using electricity at premises without agreeing a contract, or if your supplier goes out of business. Ofgem says deemed rates are usually higher than negotiated contract rates, so arrange a contract as soon as you can.

What happens when my business electricity contract ends?

If you do not agree a new deal, you may be rolled onto a new fixed term, usually for 12 months, or moved to out-of-contract rates. Both are usually dearer than a negotiated fix, so get quotes before your end date.

Do business electricity contracts have a cooling-off period?

No. Business energy contracts generally have no cooling-off period, even for microbusinesses. Read the principal terms, including any broker fees, before you agree.

How much notice do I need to give on a business electricity contract?

For microbusinesses on evergreen contracts, Ofgem says suppliers can ask for no more than 30 days’ notice. On a fixed contract, give notice in the window your contract sets out so you are not rolled over.

Final decision card

Most small businesses, HMO landlords and care homes are best on a fixed business electricity tariff, with October 2026 averages around 28.4p per kWh and 58.0p a day for micro users. Deemed, out-of-contract and rollover rates are expensive defaults, so know your end date, compare the total yearly cost of each quote and agree a new contract before your current one runs out.