Understanding Your Business Energy Bill

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As a business owner, it’s easy to forget practicalities amongst a busy lifestyle. This can result in many businesses struggling to familiarise themselves with their business energy bills.

There are two main sections which you can expect to see on your business energy bill. The billing invoice section summarises your account balance and recent charges. It shows exactly what you need to pay and when. The second section, the billing detail, breaks down the elements which make up the total bill.

Aside from these, there are a few other aspects you can expect to see on your bill:

  • VAT: VAT is normally charged at the standard rate of 20% on business energy bills if the energy is used solely for business or non-domestic purposes.
  • CCL (climate change levy): This encourages businesses to be more energy efficient, and is chargeable only on units/kWh used (not on the standing charge). Standard rate VAT is added to CCL charges. If your VAT is standard rate, you can expect to pay CCL also.
  • Unit Rate: This is the amount you pay for each kilowatt hour (kWh) of electricity or gas used.
  • Standing charge: This is the amount you pay each day regardless of how much energy is used. Business electricity tariffs always have a standing charge, however not all business gas tariffs do.

To compare and save on your business energy bill CLICK HERE.

Although these seem straightforward, some of these costs can be misleading, and there are areas which you can question or amend yourself.

  • A domestic or residential business that uses a low amount of energy* will be eligible for a 5% VAT rate and CCL. This shouldn’t require any action to get, however, you may need to submit a VAT Certificate of Declaration to advise what percentage of the supply qualifies on this basis.
  • Getting the lowest unit rate doesn’t always mean you’re paying the lowest price – it depends on usage. For heavy users, a low unit rate is vital, but for light users, a low standing charge and higher unit rate might be better.
  • Some premises are supplied via pipes owned by an independent gas transporter (IGT) rather than the default choice of National Grid Transco, which can lead to higher prices. Unfortunately, the premise holder won’t usually be aware that they are supplied via a different pipe network. The cost of transporting your gas and electricity to you will be covered by your energy bill, so it is important to fully enquire as to the origins of your supply when you set up a new contract, so you can avoid tricky hidden fees.
  • Stay aware of when your contract will end, and ensure you always give 30 days’ notice that you are ending your current contract before it is due to end. Certain suppliers will lock you in for another year if you don’t. These rolling contracts can be extremely expensive, but they unfortunately have every right to do this.

Keep an eye out for these, and if you’re still unhappy with your bill, you can always compare business energy prices to make sure you’re getting the best price. Many businesses believe that business energy is totally different to domestic energy, and therefore they can’t switch suppliers. However, it’s extremely easy and quick to do and can help your business avoid overpriced rates which many suppliers place their long term customers on after their contract ends.

To compare and save on your business energy bill CLICK HERE.

*low usage counts as using lower than 12,000kwh of electricity and 52,000kwh of gas per year

*Of Bionic customers who made a saving on a three-year business energy contract between January 2020 and May 2020, the average amount saved was £1,305.

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