Business Energy Guides How to understand your business energy bill 28th June
Energy bills don't make for great bedtime reading, that's for sure, but if you want to understand what those mysterious numbers mean for your business, it's important to get a handle on the terms involved.
What is a kWh?
KWh stands for kilowatt hour. Simply put, it's the standard unit measure of electricity, a´ à la kilometers for distance, or kilograms for weight.
One kWh is equal to running a 1000 watt appliance for one hour. So one kWh of electricity will get you about ten hours on your average laptop, five on desktop, and just over an hour on a Nutri-bullet Pro, which will easily blend both if you're so inclined.
Energy providers all charge different prices per kWh.
And a Standing Charge?
A standing charge is a set fee you pay your energy provider which covers the maintenance of your energy supply, meter readings, and the cost of Government initiatives.
Fees can be set at zero but chances are you’ll have a higher kWh charge.
So what is an MPAN?
It stands for Meter Point Administration Number. It is a number that should appear on your bill and identifies a unique electricity supply. You’ll need your MPAN if you plan to switch energy suppliers. Find more information about MPANs in our guide.
Where’s my contract end date?
This will most likely appear on your bill as the Tariff End Date. If it's not there, phone up your energy company and shout at them, because it should be.
What tariff am I on?
This should appear near to your tariff end date. Often there will just be a letter - you'll have to reference their site to find out exactly what it means. Exit fees may also be listed here.
Yes, sometimes there are exit fees if you switch, but only if you break your contract early.
It's a good idea to make a note of your contract or tariff end date in your calendar, so you know when you can switch without incurring a charge.
Is my bill what I’ve actually used or is it an estimate?
Next to your meter readings on the bill, it will either say ‘estimated’ or ‘actual/your readings’.
Estimates will be based on your usage in previous years, or on the usage of customers they see as similar to you.
To ensure your bill is based on actual usage, you need to send regular readings to your energy supplier; every month ideally. Bit of a hassle admittedly, but it's the only way to ensure accurate biling.
Do I pay VAT on my bill?
Yes, although rates on business energy vary. Look at the bottom of the final calculations, generally the column before total to pay, and you should find both the VAT charge and the rate at which you’re paying.
What is a Climate Change Levy?
A Climate Change Levy, or CCL, is a tax added by the UK government, aimed at encouraging businesses to become more energy efficient.
It is calculated according to the number of kWhs you use. If your business falls under industrial, commercial, agricultural, or public service sectors you will probably need to pay it.
Am I in credit or debit?
This might seem like an obvious one, but plenty of businesses are stung every year, so worth running through.
The issue is estimates - in reality these can be way off for all sorts of reasons. Overpayments will mean you build up credit on your account, underpayments will leave you with an account in debit.
While overpayments will find their way back to you eventually, underpayments can build up over time, culminating in a nasty shock at the end of the year.
Either way, you won't know until you submit readings. The only way to avoid these sort of pitfalls is to submit regular readings, and pay your actual balance by direct debit every month.
How can I compare costs with other energy providers?
Some bills include a Tariff Comparison Rate, or TCR, which makes it easy to see how other energy providers stack up.
The TCR is the overall rate or cost, including the cost per kWh and standing charge, and taking into account all additional charges and discounts.
Think you're being overcharged? You can switch energy suppliers at any time but you may incur exit fees if you do so before your contract is up. (Unless you are classed as a microbusiness, in which case you’re not locked in - see our guide to microbusiness energy to check if you qualify.)
Your current provider should give you a reminder around 60 days before your contract end date.
To switch you’ll need is -
- Your business name and address
- Your MPAN
- Your energy usage in kWh or cost
- Your contract end date
- Your contact details
Our online quote tool is quick and simple to use. It will give you a personalised, live quote that is valid for 48 hours. You’ll know you’re buying direct from UK generators and you’ll be getting 100% clean energy for the same price as the dirty stuff.
Or for more information, see our handy guide on how to switch. LINK