What Drives Business Gas Prices?

Energy prices can fluctuate on a regular basis, but what drives these fluctuations in business gas prices, and what types of energy contracts are available to help you get the best deal? 

A gas bill is made up of costs relating to your gas consumption (known as commodity costs), and additional third-party charges (known as non-commodity costs). 

Wholesale Gas Costs 

The majority of your business gas bill is made up of the costs your energy provider pays for your gas from suppliers. The total amount on your bill varies depending on how much gas you use. 

These charges cover the cost of using the gas distribution and transmission networks and can vary depending on your business location. These will automatically be added to your gas bill. 

Tax and Levy Charges 

There are mandatory taxes and levies set by the Government, which are aimed at encouraging renewable energy development and energy efficiency. For gas, this includes: 

• Climate Change Levy (CCL) – Specifically for businesses, this levy is designed to encourage businesses to improve their energy efficiency and reduce their carbon footprint. This varies with the amount of energy that your business uses. Find out more about the Climate Change Levy here. 
• Value Added Tax (VAT): For businesses, VAT is charged at a current standard rate of 20%, though some businesses may be eligible for VAT reductions if they fit certain criteria. Find out more about business energy VAT here. 

There are a number of factors that affect the price of business gas. 

Supply & Demand

The main commodity cost of your gas supply is largely influenced by supply and demand, this is driven by temperature, the economic cycle, and the generation needs for gas. For example, during winter months there is an increase in usage, which is therefore reflected in the cost. 

Currency Movement

Gas prices are affected by fluctuations in the value of currency and changes in exchange rates. Much of the UK’s gas supply is imported from outside of the UK, meaning currency movement could directly impact gas prices. 

Gas Importing

As most of the UK’s gas is imported from other countries, shipments can incur additional costs such as import fees, delivery and shipping costs which can directly impact gas prices.  

Regulatory Pressure

Legal restrictions on the amount of gas that can be bought and sold can heavily affect gas prices. Legislation impacting the supply, delivery, and energy trade around the world will also affect the importing of gas into the UK, and in turn, the price of gas.  

Global Events

Extreme events such as political crises or natural disasters, can cause disruption to the production, accessibility and import of gas and consequently affect prices. 

Gas Storage

Gas storage facilities around the UK are essential to ensuring that there is a sufficient supply for the country’s energy needs. Any disruption to these facilities will have an effect on gas prices.  

Stress Events

Due to the nature of gas production and storage, cracks in oil pipelines and explosions at gas hubs can limit the supply, driving up wholesale gas prices.  

There are actions that you can take to help mitigate against these fluctuations in price. Most gas suppliers will offer a range of different plans to help budget your gas costs more effectively and will be able to advise on the most suitable plan for your business. 

At Yü Energy, we have different plans available to help you budget your gas costs. Our plans can be tailored to your specific business needs so there are no surprises, and you can see exactly what you’re paying for. 

Fixed Plans 

Great for small to medium businesses who need a consistent gas plan for budget tracking, peace of mind and no additional hidden charges. Fixed Term contracts allow you to fix the amount per unit (kWh) that you pay for your energy. It does not fix the amount you pay each month, as this will vary depending on your usage. However, it does protect you from energy price increases for the duration of your contract. 

Prepayment Energy Plans 

Prepayment gas plans give more power and control to a business. They are ideal for budgeting finances and avoiding unexpected bills. Prepayment rates are usually fixed, but this can vary depending on your supplier, so be sure to check this when you sign your contract.  

Freedom Plans 

Freedom plans give you a flexible solution to your business gas. On this plan, prices are fixed but are reviewed periodically, and you will be notified in advance of any changes to your rates.  

On our freedom plan, you are able to move to a fixed term contract at any time and if you wish to cancel, you will only need to give 30 days’ notice of termination, making this plan a great option for businesses who may need to move their gas supply at a short notice. 

Green Plans 

Our carbon neutral gas plans are designed to benefit both your business and the environment, allowing the carbon emissions associated with your gas consumption to be offset through one of our sustainability partner projects.  

Our green plans are an affordable way to boost your CSR sustainability goals and do your part for the planet. 

If you would like more information about our business gas plans, or other business utilities offered by Yü Energy, visit our business utilities page.

Alternatively, get a business gas quote now and find out how much you could save.