Understanding Your Business Energy Bills

When running a business, it is crucial to keep a tight rein on expenses to maintain profitability. Energy bills are a significant expense for businesses, so it is essential to understand the different costs that make up your bill to identify ways to reduce your energy consumption and save money. Your energy bills will contain valuable information such as your energy consumption, the costs of the energy you have used, and any additional fees or charges. Understanding these different costs will help you compare energy deals from different providers and make an informed decision about switching to a cheaper tariff.

It is essential to look out for the main costs on your business energy bill, including the standing charge, unit rate, and any additional fees or charges. The standing charge is a daily fee that you pay for the supply of energy, while the unit rate is the cost per unit of energy you use. Additional fees or charges may include taxes, environmental levies, or fees for services such as meter readings. By understanding the different costs of your energy bill, you can identify areas where you may be able to reduce your energy usage, such as by implementing energy-efficient practices or investing in renewable energy sources. This can help you save money on your energy bills and contribute to a more sustainable future for your business.

This is how it goes down…

Business energy bills are not just calculated based on the amount of energy consumed. The total amount you're billed each month is determined by several factors. These include the amount of energy you use, which is multiplied by the unit rate you pay on your current tariff. Additionally, a flat daily charge, known as the standing charge, is applied to your bill regardless of how much energy you use. Taxes and levies, such as VAT and the Climate Change Levy, are also added to your bill. If you're eligible for any discounts, such as the reduced 5% VAT rate, these will be reflected on your bill and subtracted from the total amount you need to pay. Compare business electricity providers online today to help you get ahead.

What to look out for:

Business energy bills can have varying formats, depending on the supplier, which can make it difficult to locate essential information. However, most bills should contain three critical sections: a breakdown of the charges, the amount of energy used (measured in kWh), and details of the contract end date and switching options. As a business owner, the primary concern will likely be the cost of energy. An example British Gas business energy bill highlights the various charges that make up the total amount paid each month. Even if your supplier presents the bill differently, it should still contain the same information. If not, it's recommended to contact your supplier for clarification. Business gas and electricity bills consist of two main costs: the standing charge and unit rate. The standing charge is a daily fee covering the cost of supplying energy to your premises and maintaining the national grid. The unit rate is the charge per unit of gas or electricity used. These costs can be further broken down into wholesale costs, transmission and distribution charges, the Climate Change Levy, VAT, Feed-in Tariffs, Renewable Obligations, and Contracts for Difference. Failure to pay your energy bills can negatively impact your credit rating, which may limit your eligibility for future energy deals.

Why are my bills so high?

Business energy bills can be high due to various reasons, including being billed inaccurately, being on out-of-contract rates, or being on deemed rates. Inaccurate bills can result from estimated readings, so it is advisable to regularly take meter readings and consider using smart meters. Out-of-contract rates can apply when a fixed-rate deal expires, resulting in higher rates. Customers can switch to a fixed deal with a 30-day notice period by consulting with an energy broker like Bionic. Deemed rates, which are the highest rates offered by suppliers, can apply to customers who move into new premises without arranging an energy deal. Suppliers charge these rates to cover the financial risk of supplying energy to customers with no credit history or record of their business. To save on energy bills, it is recommended to switch to a better tariff or supplier, and businesses can consult with energy brokers like Bionic to find the best deals.

In Conclusion

In conclusion, understanding your business energy bills is essential to identify areas where you can reduce your energy consumption and save money. Your energy bills will contain valuable information such as your energy consumption, the costs of the energy you have used, and any additional fees or charges. The standing charge, unit rate, and any additional fees or charges are the main costs to look out for on your energy bill. By understanding these different costs, you can identify areas where you may be able to reduce your energy usage and save money on your energy bills. Additionally, being on out-of-contract rates or deemed rates can result in higher energy bills, so it is recommended to switch to a better tariff or supplier. As a business owner, it is crucial to keep a tight rein on expenses to maintain profitability, and understanding your business energy bills is an essential part of achieving this goal.