Electricity Plans for Small Businesses: What to Know

Running a small business means keeping a close eye on expenses and electricity is one of the most significant monthly costs. From lighting and equipment to heating and cooling, energy bills can eat into profit margins quickly. That’s why choosing the right business electricity plan is just as important as choosing a location or supplier.

But navigating the world of small business rates, demand charges, and commercial contracts isn’t always straightforward. On top of that, many owners still believe common electricity switching myths, like assuming they’re stuck with one provider or that switching will disrupt service. In reality, small businesses often have more options than they realize.

Here’s what you need to know to make an informed decision.

How Business Electricity Plans Differ from Residential Plans

While residential customers focus on predictable bills and convenience, business electricity plans are structured differently to reflect commercial usage patterns.

• Higher energy demands – Businesses often use more electricity, especially during daytime peak hours.
• Demand charges – Instead of only paying for kilowatt-hours used, businesses may also pay extra fees based on their highest short-term energy demand.
• Contract terms – Commercial contracts may have longer commitments but can include better rates for higher consumption.

Understanding these differences is crucial to avoid unexpected costs.

Small Business Rates

Small businesses don’t use as much electricity as large factories, but their usage is still higher than a typical home. Utilities often offer small business rates tailored to mid-level consumption.

• Tiered pricing – The price per kilowatt-hour may decrease as usage increases.
• Flat-rate plans – Simple, predictable billing that works well for very small businesses.
• Time-of-use plans – Beneficial if your operations can shift energy-heavy tasks to off-peak hours.

Before choosing, analyze your business’s typical energy profile hours of operation, peak usage, and seasonal spikes.

Understanding Demand Charges

One of the most misunderstood aspects of commercial billing is the demand charge.

• What it is – A fee based on your highest 15–30 minute usage period within a billing cycle.
• Why it matters – Even if you only hit peak demand once, the charge applies for the whole month.
• How to manage it – Stagger equipment usage, invest in energy-efficient appliances, or use smart controls to limit simultaneous demand.

Ignoring demand charges can lead to much higher bills than expected, even if your overall usage is moderate.

Commercial Contracts

Unlike residential plans, where month-to-month options are common, commercial contracts often lock businesses into fixed terms.

• Length – Contracts may run from 12 months to several years.
• Flexibility – Some providers offer tailored plans based on your industry or business size.
• Early termination fees – Just like with residential accounts, breaking a contract early can trigger penalties.

Before signing, review contract details carefully. Providers may promise attractive rates up front but include clauses that limit flexibility.

Evaluating Electricity Provider Service

Price isn’t the only factor. As discussed in the last blog, electricity provider service makes a huge difference, especially for small businesses where downtime directly impacts revenue.

When comparing providers, look for:

• Customer reviews – How do other business owners rate their service?
• Response time – Do they handle outages and billing errors quickly?
• Online tools – Can you track usage, manage billing, or report issues easily?
• Complaint records – Check state utility commission sites for unresolved disputes.

Good customer service ensures your business gets the support it needs without wasted time.

Green Energy for Businesses

Many providers now offer renewable options in their business electricity plans. Choosing wind, solar, or renewable credits not only supports sustainability but can also appeal to eco-conscious customers. Some businesses even use their green energy plans in marketing to differentiate themselves.

Tips for Small Business Energy Management

Even with the right plan, reducing usage helps cut costs. Practical strategies include:

• LED lighting upgrades – Lower lighting costs by up to 80%.
• Programmable thermostats – Manage heating and cooling efficiently.
• Smart plugs and timers – Reduce phantom loads from idle equipment.
• Energy audits – Some utilities offer free audits to identify savings opportunities.

Managing usage also helps keep demand charges in check.

Busting Myths About Switching for Businesses

As we covered in the last article, many myths prevent customers from switching providers. For small businesses, these misconceptions are even more costly:

• Myth: Switching interrupts power – False. Utilities maintain delivery, so your lights stay on.
• Myth: Switching is expensive – Many providers offer to cover electricity termination fees.
• Myth: All providers are the same – Service quality, contract flexibility, and green options vary widely.

Being willing to shop around and switch can save your business thousands over the life of a contract.

Final Thoughts

Choosing a business electricity plan isn’t just about finding the lowest rate it’s about understanding how small business rates, demand charges, and commercial contracts affect your costs. Pair that with strong customer service and, if relevant, renewable energy options, and you’ll set your business up for long-term savings and reliability.

Don’t let myths or confusion hold you back. Take the time to evaluate plans, compare electricity providers, and choose the one that aligns with your business’s energy profile and financial goals.

Power Your Small Business with Confidence

Find the plan that supports your success. Visit Get Home Utilities electricity page today to explore business electricity plan options and compare providers tailored to small business needs.