The supply is the same. The contract is not.

There is no separate business grid. The power arriving at a warehouse comes down the same network as the power arriving at the house next door. What differs is the legal category the meter sits in, and that category decides how you are priced, what protections apply, and how easily you can leave.

A domestic supply is a consumer contract. It carries consumer protections: a price cap, a cooling-off period, the right to switch away more or less whenever you like. A business supply is a commercial contract between two companies. Most of those protections do not apply, on the reasonable assumption that a business can read a contract before signing it. That assumption is doing a lot of work, and it is where most of the trouble starts.

Why the prices are structured differently

A household is offered a published tariff. Look it up, compare it, sign up. Everyone with similar usage gets roughly the same number.

Business electricity is quoted, not published. A supplier prices your site specifically, based on how much you use, when you use it, the meter type, the location, and your company credit position. Two units on the same estate can be quoted different rates on the same day. Neither is being mistreated. They present different risk and different consumption shapes.

The charges a household does not pay

VAT. Domestic electricity is charged at 5%. Business electricity is normally 20%. Small users can qualify for the reduced rate if consumption falls below the de minimis threshold, or if at least 60% of the supply goes to a domestic or charitable use. It is not applied automatically. You have to claim it with a VAT declaration, and plenty of small sites pay the higher rate for years without realising a lower one was available. Our VAT on business energy entry covers the thresholds.

Climate Change Levy. A per-kWh environmental tax that households do not pay at all. Sites on the reduced VAT rate are generally exempt. Everyone else pays it, and it appears as its own line rather than being folded into the unit rate. See CCL.

Capacity charges. Larger sites pay for the capacity they have reserved from the network, whether they use it or not. A household has no equivalent. If your site has a half-hourly meter, this is worth a look, because businesses routinely carry more authorised supply capacity than they need and pay for the surplus every month.

Contract length, and the fortnight that does not exist

Domestic contracts run twelve or twenty-four months and you can walk away with a fortnight of notice if you change your mind.

Business electricity contracts commonly run one to five years, and once signed they are binding. There is no automatic cooling-off period for a business, and a verbal agreement recorded on a supplier phone line can be enforceable. That surprises people who assume the fourteen-day right to cancel applies everywhere. It does not, and suppliers hold businesses to it.

The practical consequence is simple. The ten minutes before you agree to a business contract matter more than the ten months afterwards.

There is no price cap, and no safety net tariff

If a household does nothing at the end of a fixed deal, it rolls onto a capped standard variable tariff. Not brilliant, but bounded.

A business that does nothing rolls onto out-of-contract rates, which are uncapped and typically the most expensive rates the supplier offers. They are priced for the risk of supplying a site with no agreement in place, and they can be double a negotiated rate. This is the most expensive mistake in business energy, and it is caused by a diary rather than a decision.

If you have taken over premises where the previous occupier contract has ended, you may be on deemed rates from day one without ever having agreed to anything.

Switching works differently too

Your supplier runs a credit check, because they are extending you several months of energy before invoicing. A weak balance sheet can restrict which suppliers will quote, or trigger a security deposit.

You will be asked for a Letter of Authority if anyone tenders on your behalf. It lets them request your consumption data from your current supplier. It does not let them sign anything.

And a supplier can object to a switch if you owe money or you are still inside your contract term. Households can usually leave a fixed deal in the final weeks without penalty. Businesses generally cannot leave at all until the term ends, though you can normally agree a new contract in advance to start the day the current one finishes.

What this means when you compare

Comparing business electricity on unit rate alone will mislead you, because the unit rate is only part of the cost. A quote with an attractive rate and a high standing charge can cost a low-usage site more than a quote that looks worse on paper. Contract length, payment terms and whether the price is fixed or pass-through all move the final figure.

The number that matters is the total annual cost for your consumption, not the headline. That is the comparison worth doing, and it is the one most quote tables quietly avoid. If you would rather not run it yourself, that is what a business energy broker is for.