Understanding Your Business Energy Bill
When it comes to your business, every penny counts. And if you are overpaying on your commercial gas and electricity bills, you could potentially be missing out on some vital savings that would give your company additional money to spend on more important things.
Unfortunately, many business owners pay too much for their gas and electricity without realising it. One of the main reasons for this is that, simply put, they don’t understand their bills.
Love Energy Savings is here to cut through all the industry jargon and explain the different components that make up your business energy bill.
How is business energy different?
There are quite a few nuances to get your head around, especially in comparison to home energy bills. The main ways in which they differ are...
It depends on the supplier, but usually for domestic energy, you’ll incur a fee if you plan to switch before the end of the contract. For business utility bills however, you may find that your supplier will object to you switching if you are on a fixed-term contract and it has not expired.
Know your terms and conditions and better still, make sure you agree with them before you switch to a new energy company. That way, you’ll avoid any nasty surprises further down the line.
This is one aspect of a gas and electricity contract that catches many businesses out. The fact of the matter is business energy suppliers do not want you to leave your contract and switch to a rival supplier, and why would they? It means they’re losing a paying customer.
A few months before your contract is set to expire, start to shop around for a new commercial energy supplier, find the best deal for you and make your existing provider aware of your plans.
If you fail to do so, your contract will automatically be renewed, and it’s highly unlikely that you’ll be rolled over on to the best possible tariff.
Know your dates!
What other charges should I look out for on my business energy bill?
When it comes to the cost of your business energy bills, there are a number of charges you should be aware of. These include:
- VAT Charges
- Transmission Use of System (TNUoS) charges
- Climate Change Levy (CCL) charges
- Metering costs
What is the rate of VAT on energy bills?
VAT on electricity and gas bills for businesses is charged at a rate of 20% compared to 5% for domestic users. However, not all businesses are required to pay VAT at the higher rate.
If your business electricity usage is below the average 33kWh per day or 1,000 kWh per month, you will be eligible for a lower rate of VAT on electricity bills.
To be eligible for a lower rate of VAT on gas bills, your gas usage must be below the average 145kWh per day or 4,397 kWh per month.
Do charities have to pay the higher rate of VAT on energy bills?
If you run a charitable or not-for-profit organisation, you will only be required to pay VAT at a rate of 5%.
However, this reduction will not be added to your energy bill automatically so it’s important that you inform your supplier or energy broker that you represent a non-profit organisation as soon as possible.
If you were previously 20% VAT on your electricity bills or gas bills, you can claim a rebate on overpayments you have been making over the last four years.
Find out if how your charity can make the most of VAT reductions.
What is the Climate Change Levy (CCL)?
The Climate Change Levy (CCL) is a tax introduced to encourage businesses to improve energy efficiency and reduce the impact of the energy they use on the environment. The tax is paid by non-domestic users on a per-unit basis.
The main rate of CCL applies to businesses in the following sectors:
- Public services
You won’t be required to pay the main rate of CCL if you are:
- A business that uses small amounts of energy
- A domestic energy user
- A charity engaged in non-commercial activities
Large, energy intensive businesses can reduce their CCL rates if they have entered into a climate change agreement (CCA).
You can find out more about the Climate Change Levy here.
Transmission Use of System (TNUoS) charges
Transmission use of System (TNUoS) charges are added to your business gas and electricity to cover the costs of transporting and distributing the energy you use.
Your provider is required to cover the expenses of maintaining and upgrading the National Grid and these charges are worked into your monthly bills.
The cost of this will vary depending on where your business is located.
Is my business required to pay metering costs?
Simply put, metering costs are the cost of buying and maintaining your gas and electricity meters. The cost of your meter is usually spread over a very long period.
Businesses without a smart meter will also have the cost of carrying out meter readings included in their overall metering costs.
How easy is it to save on my energy bills?
We understand how much of your time is spent ensuring that your business runs smoothly, so remove the pressure of finding the lowest business energy prices and let us do the work for you.
Here’s how our saving process goes:
● We find not only the right tariff for your business, but the cheapest. We’ll talk you through the differences of each one and let you make the final decision.
● Our help and advice allows you to make an informed choice, based on price, tariff type and what’s important to you.
● We take the hassle out of dealing with your old supplier and ensure you’re in total control of your switch with plenty of time to spare, avoiding that nasty automatic rollover.
● Simply grab a bill, compare a few prices and give us a call on 0800 988 8375.
You’ll even get your own dedicated account manager, who will get in touch at a time that suits you, ensuring there are no problems. They will also inform you of the cheapest prices on the market as you near your next renewal period.
What are the common tariff types?
The needs of each and every business are different, which is why there are a wide variety of tariffs available to suit you. Here are the most common deals available.
Variable Price Tariff
This is affected by market fluctuations, which could mean your utility bill may differ from one month to the next. The amount of energy your business uses can also influence this type of tariff, so if your output can vary, this is the choice for you. Take a look at our business energy supplier table for more information.
Fixed Price Tariff
Based upon your meter readings, you will be charged an estimated tariff each month, which can help to give your outgoings some stability. This works in a similar way to a standing order; it’s ideal for companies who know exactly how much energy they are using when the time comes to pay the bill.
Price Freeze Tariff
Also known as a capped tariff, they come with a guarantee from the supplier that the amount you need to pay will not increase over the course of your contract. Again, this is beneficial if your business consistently uses the same amount of energy.
No Standing Charge
If you have a ‘No Standing Charge’ tariff (NSC), you don't have a flat cost charged to you from the supplier per day, you only pay for the energy that you use. The supply cost is usually factored into the price of each unit, so it is slightly more expensive than the unit rate on a normal plan.
A green energy tariff is usually available in two different varieties - either your energy supplier will pledge to match the amount of energy you use with renewable sources, or they will make a contribution on your behalf to environmentally friendly projects. You can learn how your company can help the environment here.
Only available online as the name suggests, this can help to keep your bill a little lower, thanks to the lack of paper and postage used. This is perfect if your business trades on the web. Just another way in which you can be eco-friendly and financially savvy.
Compare business energy prices with Love Energy Savings
At Love Energy Savings, we aim to make it as simple as possible for you to make savings on your business energy bills.
Not only can we help you quickly compare the best energy prices online, but our experts will also provide advice on ways in which you can reduce your energy bills.
To find out how much you could save, simply complete our online comparison engine here.
Or, if you have any questions about your business energy bills, please don’t hesitate to get in touch with the experts at Love Energy Savings.