Business Energy Bills - Guide and FAQs

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For many people, switching their business energy supplier to get a better deal can seem fairly daunting and business energy bills can be quite confusing. With business electricity and gas tariffs differing from supplier to supplier, the information found on business energy bills can be varied. Fear not, as here we have pointed out the most important information so you know what to look for.

A guide to the charges included in your business utility bills

There are various aspects of an energy bill that account for how much you're charged, with suppliers adding a margin for profit to ensure that they're making money from their own business models. Here is a quick breakdown of the numerous factors that make up the bill for your business gas and electricity.

The wholesale costs

A large chunk of your bill can be explained by the costs suppliers pay to buy your gas and electricity from the wholesale market. The process works by providers buying the energy they expect you to use in advance of your contract starting - something that ensures you don't run out of gas or electricity throughout the duration of your contract. In some respects this is an advantage for businesses on fixed-price deals, as any increase in wholesale prices will not immediately have on impact on their bills.

Transmission Use of System charges (also known as TNUoS)

Transporting and distributing energy isn't cheap, so the costs that suppliers incur for doing so are also included in gas and electricity bills your business pays.

With providers also having to pay to cover the expenses of maintaining and upgrading the National Grid, these charges are worked into the bills you pay too. It's worth noting these will vary depending on the geographical location of your business, as certain zones place various levels of demand on the network.

Paying for Distribution Use of System (also known as DUoS)

These costs are applied by the Distribution Network Operators (DNO), which are companies that are licensed to distribute electricity in the UK. The charges are applied for a range of factors, including day and night charges and the maximum supply requirements of sites that make up the network.

The climate change levy

The Climate Change Levy is a tax introduced by the government that was introduced in 2001. Its purpose is to encourage various sectors to improve energy efficiency and cut their greenhouse gas emissions.

This is often referred to as the CCL, and is a tax paid by non-domestic energy users on a per-unit basis. Ultimately, this is designed to act as an incentive for businesses to boost their energy efficiency credentials by reducing their carbon emissions.

Some companies are exempt from paying the CCL depending on the amount of renewable energy they use, although nuclear power - despite having no direct impact on carbon emissions - is subject to the charge.

Value added tax (VAT)

This is charged on business gas and electricity bills at a rate of 20%, but some businesses will be able to pay a reduced rate of 5% this if they use less than 33 kilowatt hours of electricity - or less than 145kw hours of gas - per day.

Business Energy Bill and Contract Frequently Asked Questions

Still have questions about your business energy bill or your electricity or gas contract? See below our frequently asked questions to see if any can help!

What is a rollover contract?

These contracts automatically renew themselves when your current deal expires - if you don't terminate them with a letter of notice in a specific timeframe, they will renew and you may not even know about it. Often the new contract will be more expensive than the previous one, so you'll end up paying higher bills.

How do I avoid getting rolled over?

This entirely depends on the energy supplier you're with, as each of them has different and often complex rules regarding when you can cancel your contract. You need to look out for a letter from your supplier that tells you when they intend to roll you onto a new contract, it is then up you to terminate before a set date. If you miss this period then you'll be locked in to another deal for a set period of time, and the process then repeats itself.

Does it make a difference if I'm a Not-for-Profit organisation?

This doesn't make any difference - as far as the suppliers are concerned, Not-for-Profit companies count as a business, so we'll still be able to switch you to a better deal.

Are there other types of contract to look out for?

In addition to rollovers, there is also '28 Day' and 'Deemed Rates' contracts that businesses may be on.

What's a 28 Day contract?

If your business has not attempted to switch suppliers since the market was deregulated in the early '90s, you may be on a 28 Day supply contract where you'll be paying variable rates. These are rarely competitive, which is why we recommend being on a fixed-rate, fixed-term deal. As the name suggests, you only need to give 28 days' notice if you want to cancel and switch.

What are deemed and out-of-contract rates?

These tend to be the worst, often applying to businesses that are either moving into a new premises or have terminated a contract but subsequently failed to switch to a new provider. However, the notice period for cancellation or switching is the same as on a 28 Day contract.

What is half-hourly/100kW supply?

Meters described as half-hourly are for businesses that are energy intensive and have had an average peak electricity demand above 100kW in any three months of the previous year. For more information about half hourly electricity you can visit our half hourly electricity page.

What if I'm new to a premises?

If you're new to your business premises then you'll be supplied by the same provider as the previous tenants. However, the chances are that you'll be charged out-of-contract rates which are higher than average, so it's important to arrange a new commercial energy deal for your business as soon as possible. If you let us know your new address, we can find out the name of your current supplier.

Can you install a meter in a new site?

If you’ve recently moved your business to a new site and would like a new meter installed the best thing to do is to contact your local business energy supplier, who will install a meter and enter you into a fixed-price contract on the minimum fixed-term deal they offer. Once you're in this situation, we can search the market to find you a cheaper provider to use when your deal expires.

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