Common Factors That Affect Electricity Costs

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The recent economic setbacks experienced by the global economy have only served to exacerbate the insidious task of cost management for business owners. In addition to managing the innumerable costs that are associated with the operation cycle, the additional burden of rising electricity prices serve as a dampener on business prospects, especially with the hovering grey cloud of economic uncertainty. As such, an increasing number of business owners are in the market for an economical utility provider that will assist them in their cost cutting endeavours.

The determination of the utility bills for households and businesses are based on similar variables. However, in spite of the similarity, Business electricity rates are distinct from the prices levied on households. This distinctness is a consequence of the customisation of the utility usage prices offered to business owners. By offering of an attractive customisable plan, the utility providers are able to entice business owners into opting for their utility provision. Based on the higher consumption patterns of businesses, this enticement will contribute to the retaining of an economically profitable consumer for the utility company. 

Irrespective of the customisable nature of the utility plan, there are certain costs that are applied to the utility bills that can be irrepressibly avoided. One such cost is the ‘demand rate’. When businesses are first set up in a new locale, they are charged this rate by default. According to this rate, their power consumption charges are intermittently related to the power consumption of the entire location. The business is thus charged based on the average power consumption of all the businesses in the area. This lack of exclusiveness results in some businesses being charged a higher cost than their nominal consumption costs. 

Most businesses are consciously trying to cut costs through the adherence of consumption cutting policies. The ‘demand rate’ however, totally voids the implementation of such measures. The impetus is thus on the business owner to scrutinise the minutes of the utility plan to avoid the payment of incumbent prices based on the ‘demand rate,’ as it may prove to be a stumbling block to the outlook of the business. The good news is that business electricity suppliers are open to the removal of the ‘demand rate’. Through an open negotiation with the supplier, it is feasible to be charged based on the nominal consumption in retrospect to the average consumption. In some cases, the provider is willing to offer a fixed charge for consumption. However, the viability of such an offer depends on the utility service provider. 

Other factors affecting business electricity rates are the size of the firm, efficiency and the utility service provider itself. An important, but often overlooked factor is efficiency. Through the utilisation of efficient energy consumption devices such as light bulbs, the business can save big on utility bills. The wide availability and the relatively low costs of these devices, makes their implementation an obvious choice. 

Business electricity rates can be high and avoidable at times. However, by opting for the right utility providers, elimination of hidden costs and the use of efficient power consumption devices, it is highly possible to experience a significant reduction in these prices.

Mike is a freelance writer. He has researched a lot regarding the effects of global warming. He can advice you on how to save money on your business electricity rates.