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Understanding your business electricity and gas bills

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When comparing your business electricity and gas, you will need your bill to hand. It is important to understand your energy bill. It is the key to helping you find cheap business electricity and gas deals.

Some energy bills are difficult to get information from. Some suppliers have improved, but many struggle to find information they need.

Business energy bills include a lot of important information. They are useful for businesses who would like to understand how they use energy. This helps inform how they can increase energy efficiency.

Business Electricity and Gas Bill Overview

Companies are not able to have a dual-fuel contract. This means that electricity and gas bills are separate. Businesses may be billed separately by the same supplier. This is where energy gets a little more complicated for businesses.

Household and commercial energy may share lots of similar language. This is where the likenesses mostly end. Commercial energy deals are tougher to leave. Suppliers lock companies into longer contracts and switching will take longer.

Like domestic deals, it's still worth shopping around. Finding cheap business energy deals has become much easier with price comparisons. You can compare here. You will have to switch your business electricity and gas separately.

Forgetting about the contract end date for commercial energy can be much more costly than household energy.  Businesses are often ‘rolled over’ to new deals without realising. These are expensive out-of-contract rates and are difficult to get out of. Rollover contract are fixed and businesses are locked in for 12 months.

What energy tariff is my business on?

Your business tariff is displayed at the top of your energy bill. There are hundreds of different tariffs available. Larger business can access bespoke tariffs due to larger demands.

Some of the most popular business electricity and gas tariffs are:

Fixed Price Tariffs

These tariffs are calculated on average usage. This information is based on the companies meter readings. You will be paying the same amount every month or quarter. This removes any uncertainty around the price of the energy bill. Many suppliers offer a discount for direct debit payments.

Variable Price Tariff

This tariff changes in line with current wholesale prices. This means if the price of electricity and gas goes up, variable rates will go up. Businesses could benefit from price drops in the market. Variable rate tariffs offers flexibility. Companies are not restricted by long-term contracts.

Price Freeze, or Capped, Tariff

This agreement sets a price limit on energy before signing a contract. This may be honored for the duration of the contract. This is good value for businesses with the same energy usage every month.

Here are the main sections of a business electricity and gas bill:

Notice date

Both business electricity and gas contracts are usually fixed term. Every bill includes the end date of the agreement and the notice date. This is located at the top of the bill. The notice period is the prefect time to switch. This is your window to find a cheaper business energy deal. This also indicates the latest date you can tell your supplier you're switching.

Set a calendar reminder of this date. It will help you avoid being switched to a rollover contract. Once on a rollover contract, you will not be able to switch until it's end date.

Standing Charge

Business electricity and gas bills both show costs broken down. This includes any standing charges. This is a fixed daily amount charged to supply energy to your premises. It also covers any maintenance costs. Some business energy tariffs do not have a standing charge. This information will be on your bill.

Unit Rate

This is the price for each kilowatt-hour (kWh) of electricity or gas. The kWh price needs to as low as possible when shopping for deals. Some suppliers offer deals with Economy  7 or 10 tariffs. This charges cheaper electricity and gas during off-peak hours. These tariffs are popular with restaurants and businesses who operate at night or weekends.

VAT

Most businesses pay a standard rate of VAT (20%). Some businesses may be eligible for a reduced rate of 5%.

To qualify for a reduced rate, you must meet these requirements:

 

  • A charitable enterprise or not-for-profit.
  •  Use the majority of its energy consumption for domestic or residential use.  For example, a nursing or children’s home, student accommodation, school or another similar facility.
  • Using on average less than 33kWh per day or 1,000 kWh energy per month.

The reduced rate is not applied automatically. Eligible companies must submit a VAT Declaration Certificate. Payments can be reclaimed if a company has been paying the standard rate. Eligible companies should get in touch with HMRC.

Climate Change Levy (CCL)

The Climate Change Levy is a tax imposed by the UK government. It encourages UK businesses to reduce their energy consumption.

The tax applies to companies in the following sectors:

  • Industrial
  • Commercial
  • Agricultural
  • Public Services

Companies are not eligible for both the CCL and a VAT reduction. See the section above.

To qualify for the CCL, businesses must sign an agreement with the Environment Agency. This is an agreement to energy efficient measures. You will receive a tax reduction in return.

Transmission Use of System (TNUoS) charges

Transmission use of System (TNUoS) are fixed costs on your bill. These relate to the charges of transporting and distributing the energy to your business.

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Percentage energy savings quoted are against customers who let their last contract renew automatically.

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