Understanding Your Business Energy Bills
It takes a lot of effort to run a successful business, and often you will find that a number of different tasks will compete for priority. As a result, taking a deep look at your business energy bills will often not make it to the top of the to do list. Yet, you can really benefit from spending some time to understand this document.
What is included on your business energy bill
The standing charge is the rate your business will pay each day for your energy supply. This does not factor in how much gas or electricity you consume.
All business electricity tariffs have a standing charge. Whereas, not all business gas tariffs have this type of charge. It is worth mentioning that if you have a lower standing charge, your energy supplier will often calculate these costs into your unit rate.
The unit rate is the amount you will be expected to pay for each kilowatt hour (kWh) of gas or electricity your business uses.
It should be noted that if your tariff does have the lowest unit rate, this doesn’t necessarily mean you are paying the lowest possible amount for your energy usage. This will largely be determined by how much energy you are using. For example, a low unit rate will be vital for heavy users, while light users could benefit from a higher unit rate that has a low or non-existent standing charge.
Contract end date
As the name implies, this is the date that your current contract will come to an end. Before it’s due to expire, you should start looking for a new deal.
The contract end date is the point at which your current fixed price period ends.
Climate Change Levy (CCL)
The Climate Change Levy (CCL) is a government levy that requires you to pay for each unit of non-renewable energy your business makes use of.
The CCL will not have to be paid for any renewable energy your business uses. Additionally, if your business also uses less than an average of 33 kWh of electricity and 145 kWh of gas per day, you will also not be required to pay this charge. Annually, this amounts to 12,045 kWh of electricity and 52,925 kWh of gas.
Businesses that have a domestic or residential function may not be required to pay this levy. For example, care homes and B&Bs. To learn more, check out our Climate Change Levy guide.
VAT (Value-added tax)
Most companies will be paying 20% VAT on their business energy bills. Although, businesses that use less than an average of 33 kWh of electricity or 145 kWh of gas per day will only have to pay 5% VAT, similar to the CCL charge.
An IGT or independent gas transporter will own pipes that supply some business premises. This is an alternative to the standard default choice of National Grid Transco, wherein most businesses receive their supply through.
If your business is supplied by an independent gas transporter, you may have to pay a higher price for your gas. Unfortunately, this is not always made clear to premise holders that they are being supplied through an alternative pipe network. Normally, the gas supplier will have to pay a fee to the IGT to use their pipes for transportation. This will be on top of using any parts of the Transco network for its source to meter journey. Furthermore, your choice of business gas suppliers will be limited if you are served by an IGT.
Smart meter charges
Many energy suppliers will now provide customers with a smart meter as standard. These are often free to use as the supplier will recover the costs through the metering system. Although, only some meters will explicitly state a charge on the business energy bill.
With this in mind, having a smart meter makes a lot of sense for business owners. They are far more accurate and reliable when it comes to calculating energy usage and efficiency through automated meter readings. This will be a real relief to many, as meter readings of years past were often inaccurate and required extra administration work. Your business’ cashflow can also be better utilised by being able to monitor how much gas or electricity you are consuming on a day to day basis.