Business Energy

Business Energy

A Complete Guide to Business Energy Bills

It’s important to make sure you understand your business energy bill, as it contains a wealth of useful information, letting you see what type of tariff you’re currently on, and how much you’re paying for your business gas and electricity. But, with so much detail crammed into one bill, it can be confusing to read, and difficult to know what you’re looking at. Here’s how to decipher the detail so you can understand your bill and make sure you’re getting the best deal.

What is on your business energy bill?

It can be difficult to pick out which parts of your bill are relevant to you. The way your bill is structured will vary from one supplier to another, but the information it contains will be the same. Here are the key things to look out for:

  • Bill date and bill number: your supplier will use the date the bill was sent and the number of the bill to quickly and easily identify your bill
  • VAT number: and your business’s registered VAT number
  • Account number: your customer account number - this is one of the ways your supplier can identify you
  • Contract details: a brief outline of the energy contract you’re currently on
  • Billing period: the period of energy usage you’re being charged for
  • Type of charges (accurate/estimated): the type of reading your charges are based on. Accurate charges are based on meter readings, whereas estimated readings are just that - an estimate.
  • Outstanding charges from previous bills: any amount you still owe from any previous bills
  • Charges for the billing period: the charges you’ve incurred during the billing period
  • VAT charges: the amount of VAT that’s been added on to your bill
  • Total amount due: the amount you’re due to pay, including this month’s costs, any outstanding amount from a previous bill, and VAT
  • MPAN/MPRN number: unique reference numbers used by your supplier to identify your property and your meters
  • Breakdown of charges: a breakdown to show you exactly what you’re being charged for

What is an average business gas bill?

The amount you’ll have to pay for business gas depends on your supplier and the location of your business premises, but these average figures should give you a general idea of what to expect to pay.

The average unit price for business gas is 2.84p per kWh, with an average standing charge of 40p per day.

  • A small business using 10,000 kWh per year has an average gas bill of £430 a year
  • A medium business using 25,000 kWh per year has an average gas bill of £856 a year
  • A large business using 45,000 kWh per year has an average gas bill of £1,424 a year

What is an average business electricity bill?

As with gas charges, business electricity charges are influenced by your business’s location and your energy supplier, but these average amounts will give you a rough guide to what you can expect to pay:

Business size Average annual electricity usage Average price (per kWh) Average annual electricity bill
Micro business 7,500 kWh 14.16p £1,164
Small business 15,000 kWh 13.59p £2,137
Medium business 25,000 kWh 12.58p £3,240
Large business 60,000 kWh 12.24p £7,435

What costs make up your business energy bill?

Your business energy bill is made up of a number of smaller costs. The two main ones are:

  • Daily standing charge: this covers the cost your supplier has to pay in order to physically transport gas and electricity to your premises, as well as the maintenance of the national grid
  • Charge per unit of energy (kWh): also known as a unit rate, this is the amount you pay for each unit of energy your business uses

These are the two costs to look out for when you’re comparing quotes for business energy.

The standing charge and unit rate can be broken down further - here’s what makes up those charges:

  • Wholesale costs: this is the price the supplier has to pay to buy the energy which they then pass on to you - this makes up part of your unit rate
  • Transmission use of system charges (TNUoS): this covers the supplier’s contribution towards the upkeep of the national grid, and is usually included within your standing charge
  • Paying for distribution use of system (DUoS): this 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): this is a tax on each unit of energy your business consumes. It’s designed to encourage businesses to become more energy efficient and reduce their carbon footprint - depending on how much you’ve done to improve your business’s energy efficiency, you could become exempt from paying this.
  • VAT: usually charged at 20%, but you can get this reduced to as little as 5% of your energy costs if you use less than 33 kWh of electricity or less than 145 kWh of gas per day.

How to pay your business energy bill

You can choose how to pay your business energy bill, and the method you go for can affect the amount you have to pay. Choosing the right payment method can be about keeping costs down as well as convenience, so if you think a different method would work better for you it’s worth speaking to your supplier. These are the most common payment methods:

  • Direct debit: some suppliers will offer a discount for paying by direct debit. If you pay by fixed direct debit, remember to keep an eye on the amount of energy you’re using, as it may not cover the extra energy you use during the colder winter months. It’s a good idea to review your direct debit at least once a year to make sure it’s enough to cover your energy usage - otherwise you could end up with your account being in credit or in debt.
  • BACS: this payment method gives you the flexibility to change the amount you pay each month, based on how much energy you’ve used. It means you’ll have to make a point of paying each time your bill comes through, rather than letting it get paid automatically, but it gives you more control over your outgoings.
  • Debit or credit card: if you want to pay by debit or credit card, you’ll need to contact your supplier’s payment department directly. Like with BACS, you’ll have to contact your supplier each time you want to make a payment.
  • Cheques or Giro: there will usually be a Giro slip at the bottom of your business energy bill. If you want to pay this way, you’ll have to send the slip by post to the address on your bill - remember to allow 3-5 days for postage to ensure you don’t incur any late payment charges.

Call MoneySuperMarket today on 0800 088 6986 to hear more about how we can help you save money on your business energy bills by comparing suppliers.

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