Business Energy

Business Energy

Average business gas and electricity bills explained

If you want to cut the cost of your business gas bills, or make savings on your annual electricity bills, it helps to know how and when you’re using energy, and what exactly you’re being charged for.

Let’s take a look at what makes up the average business energy bill, what a business of your size should be paying for gas and electricity, and how you can cut your bills by making a few simple changes around the workplace.

What charges are included in your business energy bills?

Your business gas and electricity bills can look complicated at first glance, because they include several different types of charges. Here’s a handy breakdown of the charges you might see on your bill:

  • Wholesale energy costs - the costs your energy company pays to buy your gas and electricity from wholesale suppliers. They buy the energy they expect you to use in advance, to make sure they don’t run out during your contract.

  • Transmission Use of System (TNUoS) charge - this covers the cost of transporting and distributing your energy, and some of it also goes towards maintaining the National Grid.

  • Distribution Use of System (DUoS) charge - costs applied by companies that are licensed to distribute electricity in the UK, known as the Distribution Network Operators (DNO).

  • Climate Change Levy (CCL) - a tax designed to encourage businesses to improve their energy efficiency and reduce their carbon emissions. Some companies are exempt from paying this, depending on how much renewable energy they use.

  • Metering costs - this goes towards paying for and maintaining your gas and electricity meters

  • VAT - this is usually charged at 20% on business gas and electricity bills, but if you use less than 33 kWh of electricity or less than 145 kWh of gas per day, you may be charged a lower rate of 5%.

  • Supplier margins - this is the amount your supplier makes from your custom, and it includes marketing, acquisition and admin costs as well as profit.

What business energy rates should you be paying?

Your business energy costs depend on a number of things. While cheap rates help to keep your costs down, the number of employees, the size of your premises, and how energy efficient your business is, all have an effect on your overall gas bill.

These tables will give you an idea of how suppliers class your business size in relation to your energy usage.

Average business gas use

Business size Low end usage (kWh) High end usage (kWh)
Microbusiness 5,000 15,000
Small business 15,000 30,000
Medium business 30,000 65,000

Average business gas rates per kWh

Business size Annual usage Price per kWh Standing charge Avg. annual cost
Microbusiness 5,000 - 15,000 4.1p - 4.5p 23p - 26p £300 - £700
Small business 15,000 - 30,000 3.8p - 4p 21p - 22p £800 - £1,400
Medium business 30,000 - 65,000 3.5p - 3.7p 18p - 20p £1,500 - £2,000

Average business electricity use

Business size Low end usage (kWh) High end usage (kWh)
Microbusiness 5,000 15,000
Small business 15,000 25,000
Medium business 30,000 50,000

Average business electricity rates per kWh

Business size Annual usage Price per kWh Standing charge Avg. annual cost
Microbusiness 5,000 - 15,000 13p - 13.5p 26p - 30p £650 - £1,800
Small business 15,000 - 25,000 11.8p - 13p 24 - 26p £1,900 - £2,900
Medium business 25,000 - 50,000 11.3p - 11.8p 21p - 23p £3,300 - £5,000

How to cut your business energy bills

Put simply, the more energy your business uses, the more expensive your next bill will be. So your first step in cutting your average business energy costs should be to cut the amount of energy your business uses.

You can start with simple measure like putting up posters to prompt your staff to switch off lights, or take bigger steps such as upgrading to more energy efficient equipment. You could even consider making changes to your premises, to improve the insulation or maximise the amount of natural light. But, this can be expensive, and is usually only an option if you own your premises.

If you're unsure, the energy efficiency guide can help you find a solution that's right for you. Remember that any upfront costs you incur can often be recouped over time with the savings that you make.

If cost is your main reason for wanting to reduce your business’s energy consumption, then we recommended running a business energy comparison. This can help you get a better price per unit for your business, you can reduce the amount that you’re paying even further.

To start your business energy comparison, call us on 0800 088 6986 today.

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