Business energy bills guide
There are many factors that determine how much you pay for your business’s gas and electricity. For a collective view of these costs, your business energy bills are an ideal reference point – especially if you’re looking to run a business energy comparison and save on your overheads.
A bill can be a relative goldmine of useful information for savvy business energy customers, including information, such as:
- A breakdown of how much you’re being charged
- How much energy you use
- If you’re currently in a window to switch to a better deal.
However, business energy bills - also referred to as a business energy invoice - can differ in format depending on your supplier. This can make it difficult to locate all of the information that is relevant to you and your business and identify opportunities to save on your bills.
With this in mind, we’ve compiled this guide to business energy bills to help you not only understand your energy bill, but also use it as a tool to help you save.
Click the links below if you would like to jump to a specific section of the guide:
Business energy bills explained: costs
Even though each supplier has their own unique layout when it comes to their bills, the information presented is standard across all suppliers. Typically, as a customer, you will most likely be interested in your costs, and how much you’re getting charged.
In the example given below, we have outlined the standard costs that you can find on your business energy bill and how they mean in terms of your monthly outgoings.
Please note: For the purposes of an example, we're using a British Gas bill, but your layout may be different depending on your supplier.
1) Outstanding balance from previous bills
This figure indicates if you have any outstanding balance from previous bills. This can often be a result of seasonality. If you set up a direct debit in the warmer summer months – when energy consumption levels will naturally be lower – you may find that you are not paying enough to cover your energy consumption in the colder, darker winter months.
2) Balance from this billing period
This cost indicates how much you are being charged for the energy that you have used during this billing period. This is broken down into:
- A unit rate
- A standing charge
For more information on the charges listed above, visit our guide to tariffs and contracts page.
3) Total amount owed
This is the most noticeable part of a business energy bill. It indicates how much you must pay in total, including your previous balance, charges from this month, as well as VAT.
4) Breakdown of charges
For a more detailed view of how your charges are broken down, your supplier should provide a detailed breakdown on their bills. As an example, consider a multi-rate contract where cheaper rates are offered during off-peak hours. In this instance the breakdown will show how your usage is divided between the two different rates. If you find that you use very little energy during the cheaper off-peak hours, then perhaps there’s a better type of business energy contract suited to your business.
Business energy bills explained: Points of interest
One aspect of a business energy bill that is useful, but is often overlooked, is access to information about your business energy contract and supply. Your bill can act as a quick reference point to quickly and easily determine if you’re on a good deal – provided you know what information to look for.
Below, we take a look at the information that is typically included on a business energy bill, to help you understand what to look for.
5) Billing period
This is the period that you are being billed for. Typically this will span from the date that your last bill was sent to a few days prior to you receiving your current bill. If you’re unhappy with the current length of your billing period, it may be possible to contact your supplier to have it changed. However, billing periods are typically based on either a monthly or quarterly period.
6) Account number
Your account number is usually located somewhere near the top of your bill, and is used by your supplier to identify you as a customer. It’s handy to have your account number readily available as you will be asked to reference it when contacting your supplier directly.
7) Contact details
If you wish to query any aspect of your bill, then you can find contact details on your bill. Most suppliers will also include separate contact details depending on your query type. For example, if you wanted to inform your supplier that you’re moving premises, then they should have a separate contact number listed on the bill for handling this sort of query.
8) Contract information
Somewhere on your bill, your supplier should indicate the details of your current contract. Typically this will include:
- The name of the plan that you’re on
- When it is due to renew
- A contact number to discuss your plan.
Your supplier should write to you at least 60-120 days’ prior to your end date to let you know that your contract is ending. However, it’s always good to keep this date in mind so you have time to properly research the market and carry out a thorough comparison.
9) Your reading type
Your bill can be based on two different types of reading:
- Estimated readings – These are used if a customer hasn’t provided their supplier with a meter reading in some time.
- Actual readings – These are must more accurate, and based off a recent meter reading.
It’s worth noting that estimated charges can leave you paying too much, or not enough, for the energy that you’re using. It’s recommended that you provide your supplier with actual meter readings at least once every six months.
10) The pay-by date
Somewhere on your bill – usually underneath the breakdown of costs, you will find the date by which the bill needs to be paid. If you fail to make a payment by this date, then your supplier may add on a late payment fee. It’s important to keep in mind that paying your business energy bill by cheque, or post, requires additional time, so you should keep this in mind when paying using these methods.
11) MPAN or MPRN number
An MPRN or MPAN number is used by the supplier to quickly and easily identify your property. This can usually be found on your bill and should match the MPAN or MPRN printed on your meter. If this is not the case, then you should contact your supplier immediately.
What costs are included on my business gas and electricity bills?
The two main costs that make up your business gas and business electricity rates are:
- A daily standing charge - This covers the cost incurred by the supplier to supply energy direct to your premises, as well as upkeep costs for the national grid.
- A charge per unit of energy (kWh) - This is a charge that covers each unit of electricity or gas that your business uses. It’s defined within the wording of your contract.
When running a business energy price comparison, it’s these two costs that you will lead your quote. However, these two charges can be broken down even further, and doing so can help you better understand how they can impact your overall business energy costs, which can result in a more informed switching decision being made.
Below, we take a look at the elements that contribute towards your unit cost and standing charge.
- Wholesale costs - As part of your unit rate, you should consider wholesale cost. Ultimately this cost is not paid by you directly, instead it refers to the amount that business energy suppliers will pay to acquire the energy that you use. However, it’s worth keeping in mind that increases in cost on the wholesale market are traditionally passed on to customers and these increases are usually reflected through your cost per unit.
- Transmission use of system charges (TNUoS) - Your TNUoS charge covers the supplier’s expense for maintaining the national grid, which is used to transport energy to your premises. Generally encompassed by your standing charge, the cost of your TNUoS can vary depending on your business’s geographical location.
- Paying for distribution use of system (DUoS) - This charge covers the costs incurred by your Distribution Network Operator (DNO) – a company licensed to distribute electricity in your area – and includes day and night charges, as well as maximum supply requirements for larger businesses.
- Climate Change Levy (CCL) - The Climate Change Levy is a government imposed tax on each unit of energy that commercial customers consume. The levy is designed to encourage businesses to improve their energy efficiency and reduce their carbon footprint. It is possible to become exempt from the CCL – however this is subject to the level of action you have taken to improve your energy efficiency.
- VAT - VAT is added onto your business energy bill by your supplier. Traditionally VAT will be charged at 20%, but it is possible to reduce this figure to as little as 5% of your business energy costs if you use less than 33kWh of electricity or 145kWh of gas per day.
The above costs will directly, or indirectly impact the cost of your business’s energy bill. Although, when discussing and quoting for new business energy prices, a supplier will typically focus on a daily standing charge and unit cost.
How to pay your business energy bill
Included on your bill will also be the payment methods available to you. The method of payment that you choose can impact on the overall cost of your bill – depending on your supplier – so, it’s worth taking the time to consider how you pay for your energy.
Below we take a look at the different types of payment, as well as their pros and cons.
Direct debit is the most common method of payment for business energy customers as it’s not only the most convenient, but some suppliers will also offer a discount for paying by this method. However, if you pay by a fixed direct debit, it’s important to keep an eye on how much energy you are using. A fixed direct debit may not cover the extra energy that your business may use throughout the colder, darker, winter months.
It’s recommended that you review your direct debit amount at least once a year to ensure that it is still sufficient to cover your energy usage – failing to do so can leave your account is credit, or debt.
Some busy business owners prefer to use BACS payments instead of a fixed direct debit as it allows them to change the amount they pay month-to-month based on how much energy they have used. However, this requires you to take action each time you need to pay your business energy bill, which can get in the way of running your business.
Debit or Credit card
Many suppliers offer the option to pay via credit, or debit card. To do so you will need to contact your supplier’s payment department directly. This number can usually be found on your bill. Much like BACS, paying by this method means you must contact your supplier each time you wish to make a payment, which is not ideal for a busy business owner.
Cheques or Giro
Another option is to pay by cheque or Giro slip – which can be found at the bottom of your business energy bill. These need to be sent via the post to an address that is defined on your bill. With this in mind, you must ensure that you take into account postage – typically 3-5 days prior to the final payment date – to avoid incurring late charges.
Picking the right payment method for you can be as much about keeping costs down as it is about convenience that certain methods can offer busy business owners. If you feel another method of payment may suit your business needs better then you should contact your supplier.
What is an average business energy bill?
Your bill will ultimately be dictated by the unit prices you pay and how much electricity or gas you use. This is why it's important to compare business electricity, as well as business gas prices, before accepting a business gas or business electricity tariff. As every business is unique - and business gas and business electricity prices and usage vary dramatically – it’s difficult to determine an average figure.
The easiest way to identify whether or not you’re paying over the odds is to look at the unit rates available to businesses of your size – and this can also help in calculating how much an average bill should cost.
For figures on average prices and bills, click here.
Why is my business energy bill so high?
The business energy prices offered in a supplier’s quote are what’s known as acquisition rates – that is, those you can expect to be offered when you switch to a new supplier. As a general rule these prices tend to be more favourable in order to entice new customers in. So, if you haven’t switched suppliers in a while, you may well be paying higher business gas and electricity rates.
Business customers who have failed to switch their energy contract in a while, may find themselves on one of the following types of business energy rates, which can often be a primary cause for inflated business energy bills.
- Deemed rates:
If you’ve recently moved into a new business premises but didn’t sign up with an energy supplier, the supplier that provided energy to the previous occupant will most likely continue to supply energy to the premises. To do so, they will usually put you on “deemed” rates. These are considerably more expensive than the rates that same supplier may offer to a new customer. Deemed rates are priced this way to make up for the financial risk suppliers take when they supply energy to a customer who they know little about –they have no record of their credit history or what the business does.
- Out of contract rates:
If your contract has recently expired, but you did not arrange a new contract, your supplier will automatically put you on out of contract (also known as standard) rates, which tend to be more expensive than contractual rates. In such cases you will have the opportunity to switch to a better deal – typically after a 30 day notice period.
Offsetting your business energy bill
The government’s Feed-In Tariffs (FITs) and Renewable Heat Incentive (RHI) schemes applies to businesses and households that install renewable or low carbon technologies at their property. The FIT scheme is dedicated to electricity-generating technologies while the RHI scheme is dedicated to heat-generating technologies.
With the FIT scheme, your chosen FIT Licensee will pay you for the electricity you generate, and you can also sell back any excess electricity to the National Grid, using this income to offset charges on your electricity bill. With the RHI scheme, the government will provide a fixed subsidy payable over twenty years provided you have installed renewable technologies eligible under the scheme.
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