Business energy for pubs: key facts
- There is no price cap on business energy. Ofgem's price cap only covers household energy, so every pub's price is agreed in its contract.
- Cellar cooling runs 24 hours a day, so a pub uses electricity even when it is closed. Overnight use is a normal part of a pub's energy profile.
- If your contract ends and you don't agree a new one, you move onto out-of-contract rates, which are usually much higher than contract prices.
- Taking over a pub without agreeing a contract puts you on a deemed contract, again usually at a higher rate. Agree a contract as soon as you take the keys.
- Most pubs pay 20% VAT and the Climate Change Levy on energy. Only very small users under the de minimis limits (33 kWh of electricity or 145 kWh of gas a day) pay 5% VAT.
- Tied tenants should check their lease: some pub companies arrange energy for their pubs or set rules on who supplies it.
- Broker fees must be shown in the contract for business energy contracts signed since 1 October 2024, and microbusinesses are protected by a 12-month back-billing limit.
Where does a pub's energy go?
In most pubs the biggest electricity loads are cellar cooling, beer and glass coolers, kitchen equipment, lighting and glass washers, with gas used for heating, hot water and cooking. Because cellar cooling never switches off, a pub uses energy 24 hours a day.
| Equipment | Why it matters for a pub |
|---|---|
| Cellar cooling | Keeps the cellar at a steady temperature day and night, all year. A poorly sealed cellar door or a cooler working against a warm room adds cost every hour. |
| Line (python) and font cooling | Chills beer on its way from cellar to tap. It often runs continuously, even when the bar is shut. |
| Bottle fridges and ice machines | Several back-bar fridges running all day add up, especially older models. |
| Glass washers and dishwashers | Heat water many times a night; heavy use on busy evenings. |
| Kitchen | Fryers, ovens, grills and extraction, on gas, electricity or both. A food-led pub uses far more energy than a wet-led one. |
| Heating and hot water | Large, older, high-ceilinged rooms with doors opening constantly are expensive to heat. Beer gardens with patio heaters add more. |
| Lighting, TVs and sound | Long opening hours, sports screens and outside lighting. |
Knowing which of these drives your bill helps when you compare contracts. A wet-led pub with a big cellar has a very different pattern from a food-led pub with a busy kitchen, and a broker needs your actual usage, not a guess, to quote properly.
How do business energy contracts for pubs work?
Pubs buy energy on business contracts, usually fixed for one to five years. You agree a unit rate (pence per kWh) and a daily standing charge for each meter. Unlike home energy, there is no price cap and no automatic right to leave mid-contract.
The main types of business energy contract a pub will be offered are:
- Fixed-price contracts. The unit rate and standing charge are fixed for the term. You know what you'll pay per unit, which helps with budgeting. Most small and medium pubs choose this.
- Flexible or pass-through contracts. Some costs move with the wholesale market or with network charges. These are usually offered to larger users or pub groups and carry more risk.
- Single-rate and multi-rate tariffs. A multi-rate tariff charges a different price at night. Because a pub's cellar cooling runs overnight, it can be worth checking whether a day/night rate suits your meter, but compare the total cost on your real usage.
Larger pubs may have a half-hourly meter, which records use every 30 minutes. Half-hourly supplies are usually priced differently and can include a capacity (kVA) charge for the maximum load your site can draw. If you see "capacity" or "availability" on your bill, ask a broker to check that the agreed capacity matches what your pub actually needs.
What are deemed and out-of-contract rates for pubs?
A deemed rate applies when you use energy at a pub without having agreed a contract, for example after taking over a pub. An out-of-contract rate applies when your fixed contract ends and you haven't agreed a new one. Both are usually much higher than a negotiated contract price.
This catches out a lot of new licensees. When you take over a pub, the energy supply stays connected, so it's easy to keep trading without realising you are on the supplier's deemed rate. To avoid it:
- Read every meter on the day you take over and photograph the readings with the date. This separates your usage from the previous occupier's.
- Find out who supplies the pub. Your landlord, pub company or the outgoing tenant may know. If not, the meter number (MPAN for electricity, MPRN for gas) identifies the supply.
- Tell the supplier you have moved in, with your readings and the date.
- Agree a contract quickly, either with the current supplier or a new one. A broker can usually get quotes within days.
If you are already on an out-of-contract or deemed rate, you are normally free to agree a new contract straight away, often without an exit fee. Check with your supplier.
Can a tied pub choose its own energy supplier?
It depends on your lease or tenancy. Some pub companies leave energy entirely to the tenant; others arrange supply for their estate or set conditions. Check your lease or tenancy agreement before you sign a new energy contract.
Points to check if you run a tied or leased pub:
- Who the account is with. Is the energy account in your name or the pub company's? If it's in the landlord's name and recharged to you, you may not be able to switch yourself.
- Any energy scheme in the lease. Some pub companies offer group energy contracts. Compare what you pay through the scheme with outside quotes before deciding.
- What happens when you leave. If you sign a fixed-term contract and then leave the pub before it ends, you may owe exit charges unless the supplier lets the contract transfer to the next occupier. Ask about this before you sign, and match the contract length to your plans.
Free-of-tie and freehouse operators can usually choose any supplier, either directly or through a broker.
What makes up a pub's energy bill?
A pub's energy bill is made up of the unit rate for the energy you use, a daily standing charge, VAT (usually 20%) and the Climate Change Levy. Half-hourly sites may also pay a capacity charge.
| Item | What it is |
|---|---|
| Unit rate | The price per kWh of electricity or gas. This is where most of the cost sits for a busy pub. |
| Standing charge | A fixed daily charge per meter, paid whether you trade or not. |
| VAT | 20% for most pubs. 5% applies only if your use is under the de minimis limits of 33 kWh of electricity or 145 kWh of gas a day, which few pubs are. |
| Climate Change Levy (CCL) | A government tax on business energy. Supplies under the same de minimis limits are excluded. |
| Broker commission | If you use a broker, their payment is often built into the unit rate or standing charge. Since 1 October 2024, suppliers must show broker fees in a business contract's main terms. |
| Capacity charge | Half-hourly meters only. Based on the maximum load agreed for your site. |
Most pubs can reclaim VAT on energy if they are VAT-registered, so the unit rate and standing charge are the parts to focus on when you compare quotes.
How can a pub use less energy?
The quickest wins in most pubs are keeping the cellar sealed and at the right temperature, maintaining cooling equipment, switching off what isn't needed outside trading hours, and fitting LED lighting and timers.
- Cellar temperature. Cask ale is usually kept at around 11 to 13°C. Running the cellar colder than you need wastes electricity. Keep the cellar door shut and the seals in good order.
- Service the cooling. Clean condenser coils and check refrigerant on cellar coolers and line coolers. Dirty or failing kit works harder for the same result.
- Back-bar fridges. Switch off or remove fridges you don't need, especially in quiet months. Put timers on bottle coolers where stock allows.
- Glass washers. Run full loads and check the rinse temperature setting.
- Kitchen. Switch on equipment when needed rather than at opening, and keep extraction to service times.
- Heating. Use timers and thermostats by zone; draught-proof doors; consider door closers on busy entrances.
- Lighting. LED bulbs and timers or sensors on outside, toilet and cellar lighting.
- Smart meter data. Half-hourly data shows what your pub uses overnight. A high overnight figure points to cooling problems or kit left on.
These are general good-practice steps, not savings promises: what difference they make depends on your pub and equipment.
What protections do pubs have on business energy?
Every business contract must now show any broker fees. Pubs that count as microbusinesses also get a 12-month limit on back-billing, and most small pubs can take unresolved complaints to the Energy Ombudsman.
You are a microbusiness for energy purposes if you have fewer than 10 employees (or full-time equivalents) and an annual turnover or balance sheet of no more than €2 million, or you use less than 100,000 kWh of electricity or less than 293,000 kWh of gas a year.
If you have a complaint about your supplier, complain to them first. If it isn't resolved within eight weeks, or you get a final response you are unhappy with, you can usually take it to the Energy Ombudsman. Complaints about brokers go through the broker's own redress scheme. Ofgem requires suppliers to work only with brokers in a redress scheme when signing up small businesses (generally fewer than 50 employees), such as the Energy Ombudsman or the Utilities Intermediaries Association's scheme.
How do I switch energy supplier for my pub?
Find your contract end date, gather a recent bill for each meter, then get quotes in good time before the end date. Many suppliers let you agree a new contract months in advance. Once you sign, the new supplier handles the switch.
- Find your end date and notice terms on your contract or a recent bill.
- Gather a recent bill for each meter, showing the MPAN or MPRN and your annual use in kWh.
- Note anything unusual: a planned refurbishment, a new kitchen, more opening hours, a change of tenant.
- Get quotes from a broker or suppliers directly. Compare the unit rate, standing charge, contract length and any commission shown.
- Give notice to your current supplier if your contract requires it.
- Sign and keep a copy of the contract and the contract summary. Diary the new end date.
For phone lines, broadband and the 2027 copper switch-off, see phones and broadband for pubs. For energy generally, see our business energy guide.
Related guides
Business energy for pubs: frequently asked questions
Is there a price cap on pub energy?
No. The Ofgem price cap only applies to household energy. Pubs buy energy on business contracts where the price is agreed between the pub and the supplier.
Why does my pub use electricity when it's closed?
Cellar cooling, line cooling and fridges run around the clock to keep beer and stock at the right temperature. Some overnight use is normal, but a high figure can point to faulty or poorly sealed cooling equipment or kit left on.
What happens to the energy supply when I take over a pub?
The supply stays connected, but you will be on a deemed contract until you agree one. Read and photograph the meters on the day you take over, tell the supplier, and agree a contract as soon as possible, because deemed rates are usually much higher.
Can I leave my pub energy contract early?
Usually only by paying an exit fee, because business energy contracts are fixed-term. Some suppliers let a contract transfer to the next occupier if you sell or leave the pub. Check the terms before you sign.
Can a tied pub tenant switch energy supplier?
It depends on the lease or tenancy. Some pub companies leave energy to the tenant, while others arrange supply or set conditions. Check your agreement and who the account is in the name of before you sign anything.
Do pubs pay 5% or 20% VAT on energy?
Most pubs pay 20%. The 5% rate only applies where use is under 33 kWh of electricity or 145 kWh of gas a day, which is very low for a pub. VAT-registered pubs can usually reclaim the VAT.
When should I start looking for a new pub energy contract?
Several months before your current contract ends. Many suppliers let you agree a new contract well ahead of the end date, which avoids rolling onto out-of-contract rates.
Is a fixed or flexible contract better for a pub?
Most single pubs choose fixed prices because they make budgeting easier. Flexible contracts are usually aimed at larger users and pub groups and carry more risk of price rises. A broker can explain the options, but the choice is yours.
How are energy brokers paid?
Usually through commission built into the unit rate or standing charge of the contract you sign. Under Ofgem rules, business energy contracts signed since 1 October 2024 must show the broker's fee. Ask any broker how they are paid.
What is a half-hourly meter and does my pub have one?
A half-hourly meter records your use every 30 minutes and is usually fitted at larger sites. Your bill or MPAN will show it. Half-hourly contracts are priced differently and can include a capacity charge.
Who do I complain to about my pub's energy supplier?
Complain to the supplier first. If it isn't sorted within eight weeks, or you are unhappy with the final response, a small business can usually take the complaint to the Energy Ombudsman for free.
Is Business Utilities Hub an energy broker?
No. We publish guides and, with your consent, pass your details to business energy brokers we work with, all of which belong to an Ofgem-approved complaints scheme. We may be paid for the introduction.