Last updated: 15 October 2026
Business electricity prices per kWh have risen sharply this autumn, and there is no single rate that every firm pays. Your unit rate and standing charge depend on wholesale costs on the day you fix, network charges for your region, government levies, your meter type and how much you use. This guide explains what sits inside a business electricity price right now, why rates are higher this October and how to read a quote line by line.
How much are UK businesses paying per kWh for electricity right now?
Current business electricity rates are well above where they were in the spring, but prices vary widely between businesses. A small shop and a factory on a half hourly meter will be quoted very different unit rates and standing charges for the same month.
The clearest measure of the market is the wholesale price that suppliers pay before they add anything else. Northern Gas and Power (NGP) reported that the Winter 26 power contract fell 7% to 14.78p/kWh in the week to 25 September 2026, a week after NGP said Winter 26 power was around 16p/kWh. That is the energy alone, before network charges, levies, supplier costs and VAT are added.
The rise has fed straight into renewal quotes. SEFE Energy says its market observations show October renewal costs up around 30% to 45% compared with a few weeks earlier, and it cites Cornwall Insight research finding energy bills have climbed 25% since February 2026.
For indicative rates by business size, see our business energy comparison guide, and treat any published average as a benchmark rather than a quote.
Wholesale power snapshot from NGP
| Power contract | Wholesale price | Date reported | Source |
|---|---|---|---|
| Day ahead power | 15.19p/kWh, up 16.76% on the week | Friday 2 October 2026 | NGP |
| Q1 2027 power (January to March) | 15.45p/kWh | Friday 2 October 2026 | NGP |
| Winter 26 power (October 2026 to March 2027) | 14.78p/kWh, down 7% on the week | Week to 25 September 2026 | NGP |
| Winter 28 power | 8.27p/kWh, just over half the Q1 2027 price | Friday 2 October 2026 | NGP |
These are wholesale prices, not retail rates, but they show why contracts covering this winter cost more.
What is driving business electricity prices this autumn?
Gas is the main driver. NGP notes that government estimates suggest gas sets the British power price around 60% of the time, so when gas rises, electricity usually follows.
Several pressures have pushed gas up this season, according to NGP’s weekly updates:
- Strait of Hormuz: the US rejected Iran’s seven day plan to reopen the Strait on 26 September, and NGP’s view was that “until a deal is agreed, the pressures that have kept prices high remain”.
- Low gas storage: NGP reported European storage at 70.6% full on 25 September, about 15 percentage points below the five year average.
- LNG supply: QatarEnergy extended its force majeure notices, adding uncertainty over winter cargoes, while Asian buyers continue to compete for supply.
- UK power supply: one Heysham 2 nuclear unit is expected to stay offline until late November, and wind output fell sharply in late September.
Norwegian supply returning from maintenance on 1 October added some relief, but NGP said it only partly offset the upward pressure. For the wider set of factors that shape your own rate, read what affects business electricity prices.
What is included in a business electricity unit rate?
A unit rate bundles the wholesale cost of energy with a long list of non-commodity charges. SmartestEnergy describes non-commodity costs as the majority of the retail electricity cost stack, so wholesale is only part of what you pay.
SEFE Energy explains that bills cover the wholesale cost plus transportation charges, regulatory levies and other third party costs. Some of these sit in the unit rate, some in the standing charge, and some appear as separate lines.
Components of a business electricity price
| Component | What it covers | Source |
|---|---|---|
| Wholesale energy | The cost of the electricity itself, bought by your supplier on the wholesale market | NGP |
| TNUoS (Transmission Network Use of System) | Installing and maintaining the high voltage transmission system in England, Wales, Scotland and offshore | SmartestEnergy |
| DUoS (Distribution Use of System) | Installing, running and maintaining the regional distribution network that serves your site | SmartestEnergy |
| BSUoS (Balancing Services Use of System) | The system operator’s cost of balancing supply and demand and keeping the network secure | SmartestEnergy |
| Renewables Obligation (RO) | Subsidy for renewable generators, paid by suppliers through certificates; SmartestEnergy put it at about £33 to £35 per MWh in September 2025 | SmartestEnergy |
| Feed in Tariff (FiT) | Support for small scale renewable generation at a government set price per unit | SmartestEnergy |
| Contracts for Difference (CfD) | Guaranteed strike price for low carbon generators, funded through a levy on licensed electricity suppliers | SmartestEnergy |
| Capacity Market | Payments to generators and demand side response providers for being available in winter | SmartestEnergy |
| Nuclear RAB | Levy collected from electricity suppliers to fund Sizewell C under the regulated asset base model | SEFE, LCCC |
| Climate Change Levy (CCL) | Environmental tax on business energy; the main rate for electricity is £0.00801 per kWh (0.801p) from 1 April 2026 | gov.uk |
| VAT | Standard rate for most business use; reduced rate for qualifying use such as low usage under the de minimis limit | HMRC Notice 701/19 |
| Supplier costs and margin | Billing, customer service, risk management and profit | SEFE |
| Broker commission | The fee paid to a third party intermediary, which suppliers must show in the contract’s principal terms | Ofgem |
Several of these costs are fixed in nature rather than tied to gas. SmartestEnergy reported research from Nesta suggesting electricity prices may be starting to decouple from gas, because CfDs and grid costs make a growing share of the bill less sensitive to wholesale moves.
What is a standing charge on a business electricity bill?
A standing charge is a fixed daily amount you pay whatever you use. It typically recovers costs that do not depend on how many units you take, such as parts of network and metering costs, so it can still appear on a bill for a site that uses very little.
The split varies by supplier. A quote with a low unit rate and a high standing charge can cost more for a low usage site than one with the reverse, so always work out the annual total for your own consumption.
How do you read a business electricity quote?
Start with the annual cost, not the headline unit rate. Multiply the unit rate by your expected annual kWh, add the standing charge multiplied by 365, then add CCL and VAT if they are not already included.
Then check these points on every quote:
- Unit rate and standing charge: confirm both are shown in pence and say whether they include or exclude CCL and VAT.
- Contract length and start date: a quote that starts in November and covers this winter will be priced differently from one starting later.
- Fixed or pass-through: find out which non-commodity charges are fixed and which can be passed through to you.
- Broker fees: Ofgem requires suppliers to clearly display any broker fees in the principal terms of contracts signed from 1 October 2024.
- Credit and payment terms: deposits, payment method and termination clauses can change the real cost.
Our business electricity team can lay several supplier quotes side by side on the same basis so you are comparing like with like.
What is the difference between fixed and pass-through electricity contracts?
On a fully fixed contract, both the wholesale price and the non-commodity charges are set for the term. On a pass-through contract, the energy price may be fixed but some or all non-commodity costs are charged at the actual rate, so they can rise during the contract.
SmartestEnergy’s fixed product, for example, secures a known rate for the wholesale portion and lets customers choose whether to fix non-commodity costs or pass them through. SEFE warns that not all “fixed” contracts are the same and that some pass-through deals are marketed as fully fixed.
SEFE’s checklist is a useful test for any quote:
- Are all non-commodity charges included?
- Are newer charges such as Nuclear RAB and revised TNUoS built in?
- Is there a pass-through clause anywhere in the terms?
- Are both the unit rate and the standing charge fixed?
Even on a fully fixed deal, SEFE notes that government levies and taxes can still change. CCL and VAT are set by government, not by your supplier.
Does contract length change the price per kWh?
Yes, often by a large amount this autumn. NGP reported that, for contracts starting from November 2026 at end of September prices, a 36 month fix was about 23% cheaper on power than a 12 month deal, and a 24 month fix about 15% cheaper.
The reason is that a 12 month contract is weighted towards this winter, which is the most expensive period on the curve. Longer terms spread the cost across later seasons that are currently trading lower, though NGP’s figures come from its own trading desk and your quotes will differ.
Why are out-of-contract rates so expensive?
Out-of-contract and deemed rates are usually much higher than a negotiated deal. SEFE says these rates are typically considerably higher than contracted prices, so letting a contract lapse in a rising market can be costly.
SEFE also warns that waiting for prices to fall can lead to higher costs. Plan your renewal early using our business energy contract renewal guide.
Is there any help with business electricity costs?
Some manufacturers can apply for support. SmartestEnergy reports that the British Industrial Competitiveness Scheme is open for applications, offering manufacturers in eight high growth sectors, and their supply chains, a reduction of up to 25% on electricity costs from April 2027. Registration closes on 30 November.
Smaller users may also qualify for reduced rate VAT if usage stays under the de minimis limit of 33 kWh a day or 1,000 kWh a month, set out in HMRC Notice 701/19. Our guide to VAT on business electricity explains the rules, including the temporary zero rate for qualifying supplies in Great Britain from 1 October 2026 to 31 March 2027.
If you think you are paying the wrong rate or the wrong VAT, a free UMW Health Check reviews your bills and supplier paperwork.
Frequently asked questions
What is the average business electricity price per kWh?
There is no official single average, because rates depend on business size, region, meter type and when you fix. Wholesale power for this winter was around 14.78p to 16p/kWh in September according to NGP, and retail rates sit above that once network charges, levies and supplier costs are added.
Why has my renewal quote gone up so much?
Wholesale gas and power prices rose through the summer and early autumn. SEFE reports October renewal costs up around 30% to 45% compared with a few weeks earlier.
What is the Climate Change Levy rate for electricity?
The main rate is £0.00801 per kWh from 1 April 2026, according to gov.uk. It is added to the electricity you use and shown on your bill.
What VAT do businesses pay on electricity?
Most business use is standard rated, which is 20%. Supplies under the de minimis limit, or where 60% or more is qualifying use, get the reduced rate under HMRC Notice 701/19.
Is a pass-through contract cheaper?
It can look cheaper at the start because the supplier is not pricing in the risk of non-commodity costs rising. You carry that risk instead, so your bill can increase during the term if network charges or levies go up.
Can I see how much my broker earns?
Yes. Ofgem requires suppliers to show broker fees in the principal terms of business energy contracts signed from 1 October 2024, and to provide the information on request.
What does Nuclear RAB mean on my bill?
It is a levy that funds Sizewell C, the first nuclear project paid for under the regulated asset base model. The Low Carbon Contracts Company collects it from electricity suppliers, and SEFE advises checking whether your quote includes it.
Get a quote
Utility Market Watch compares business electricity from a panel of suppliers and explains each part of the price before you sign. Request a quote, call 03333 601010 (Monday to Friday, 9am to 5pm) or contact us.