Small business electricity plans: how they differ from home
Business energy plans use different tariffs, often add demand charges, and are not covered by the same price caps. Here is how to compare them properly.
When a premises is used mainly for business (a shop, cafe, office, salon or workshop), the connection is usually classified as a small-business tariff rather than a residential one. The retailer sets rates based on how much energy the site uses over a year, and once your annual consumption crosses certain thresholds you move into higher tariff categories with different structures. Two units in the same street can be on very different tariffs purely because one is a home and one is a business.
This matters because the consumer protections differ. The Default Market Offer and Victorian Default Offer price caps that protect households also cover small-business customers below a usage threshold, but larger businesses fall outside that safety net entirely and negotiate rates directly. If you assume your business is protected the same way your home is, you can end up on a poor plan for years.
Demand charges: the line item that catches people out
The biggest surprise on many business bills is a demand charge. Instead of only paying for the total energy you use, you also pay for your peak rate of use: the highest amount of power you drew in any short interval (often 15 or 30 minutes) during the billing period, measured in kW or kVA. One afternoon where your air conditioning, ovens and equipment all ran at once can set a demand charge that you then pay every day for the rest of the month.
Demand charges reward smoothing your load rather than just reducing total kWh. Staggering when heavy equipment starts, avoiding running everything simultaneously, and shifting non-urgent loads out of the peak window can cut the demand component even if your total usage barely changes. When you compare business plans, you have to weigh the demand charge structure, not just the usage rate. A plan with a cheap c/kWh but an aggressive demand charge can cost a spiky business far more.
Not every small business has a demand tariff, but they are increasingly common as networks push cost-reflective pricing. Check your current bill for a "demand" or "capacity" line before you compare, so you are comparing like with like.
How to compare business energy properly
Gather a full year of bills if you can. Business usage is seasonal, and a single bill can mislead.
Separate the components: supply charge, usage rate(s), demand charge and any metering fees. A headline usage rate alone tells you little.
Match the plan to your operating hours: a business open evenings and weekends has a very different peak profile to a nine-to-five office.
Compare the whole of the market on your real usage rather than accepting a broker who only quotes a panel of retailers that pay them.
Re-check annually, because business rates drift and many premises quietly roll onto expensive standing offers.
Why an unbiased comparison matters for business
The business energy market is full of brokers paid a commission or trailing fee by the retailer they sign you to. That is a direct conflict: the plan that pays the broker most is not always the plan that costs you least. It is one reason many small businesses are on rates they would never have chosen if the numbers were laid out plainly.
EnergySorted takes no retailer commissions and compares the full market on your actual usage for a flat annual fee of around $39. For a small business, that independence is the whole point: you get a ranking built to minimise your bill, including the demand and supply components that brokers often gloss over, rather than one steered by who pays the referral. If you also run electricity at home, the same account covers both.
Frequently asked questions
Is a business electricity plan more expensive than residential?
Not automatically, but it is structured differently. Business tariffs are set by annual usage, may include demand charges, and above a usage threshold fall outside the price caps that protect households. The right plan depends on your usage profile, which is why comparing on real bills matters.
What is a demand charge on my business bill?
It is a charge for your peak rate of power use (the highest amount you drew in a short interval during the month), measured in kW or kVA, on top of the energy you used. Running lots of equipment at once spikes it, so smoothing your load can cut it even without using less total energy.
Can my small business be on the default offer price cap?
Small businesses below a set annual usage threshold are covered by the Default Market Offer (or Victorian Default Offer in Victoria), which caps standing-offer prices. Larger businesses fall outside it and negotiate directly, so they need to compare more actively.
Should I use an energy broker for my business?
You can, but be aware many brokers are paid a commission by the retailer they place you with, which is a conflict of interest. An independent, whole-of-market comparison paid by you rather than the retailers gives a ranking built to minimise your bill instead of the broker's fee.
How often should a business review its energy plan?
At least once a year. Business rates change frequently and many premises roll onto expensive standing offers when a contract ends. A quick annual comparison on your latest bills keeps you off the plans that quietly creep up.
How do I reduce a demand charge without using less power overall?
Smooth your load: stagger when heavy equipment starts so it is not all running in the same interval, and shift non-urgent loads out of your peak window. Because the charge is set by your single highest interval, flattening that spike can cut the demand component even if total kWh barely moves. Our demand charges explained guide covers the tactics.
Do small business plans have time-of-use rates?
Often, yes. Many business tariffs split the day into peak, shoulder and off-peak periods, so when you use power matters as much as how much. If your operating hours let you shift load, a time-of-use tariff can pay off; if not, a flat rate may be simpler. Compare both on your real profile.
Is solar worth it for a small business?
For many daytime-operating businesses it stacks up well, because you use most of the generation on site rather than exporting it cheaply. It depends on your roof, load shape and upfront cost. Our guide on whether solar panels are worth it in Australia covers the payback maths, which applies to a business roof too.
My business uses gas as well. How do I keep that bill down?
Gas is a separate market with its own retailers and plans, so it is worth comparing on its own. Our guide on how to save on your gas bill covers the levers, from tariff choice to reducing hot water and heating load in the premises.
What everyday changes cut a small business power bill?
Beyond the plan, the usual suspects apply at commercial scale: efficient lighting, well-maintained refrigeration and air conditioning, killing overnight standby and smoothing peak load. Many ideas in our practical ways to cut your power bill translate straight to a shop, cafe or office.
Can a business use a controlled load tariff?
If you have equipment like hot water or refrigeration that can run on a separately metered off-peak circuit, a controlled load can lower the rate on that load. Our guide to controlled load tariffs explains how they work and whether the separate metering is worth it for your setup.
General information only, current at the time of writing. Not financial advice. Rebate schemes and rules
change; always confirm details with your retailer or state government energy site.
We use cookies to understand how the site is used and improve it. Analytics stays
off until you accept. See our Cookie Policy and
Privacy Policy.
