Compare Energy Tariffs

Get a comparison & start saving now!

Understanding Your Business Energy Bill

Your business energy bill can help you avoid overpaying for your electricity and gas. Being aware of the charges that make up your bill, will help you spot any changes and improve your energy usage.

In this guide, we’ll take you through the different factors that make up your business energy bill. We’ll provide you with some tips that could help you cut energy costs.

What should I look out for on my business energy bill?

There are two main aspects that make up your commercial energy bill. These are:

  • Unit rate – This is the amount you pay per kilowatt hour (kWh) for your business’ gas and electricity. When you sign up to a tariff, you can either choose to have a fixed-rate contract or a variable rate. With a fixed rate deal, your unit rate stays the same throughout your agreed term. On a variable rate deal, your unit rates depend on market activity. 
  • Standing charge – This is a daily fee that you pay to your supplier for delivering your energy. This charge covers the cost of meter readings, network maintenance, transportation, and distribution. 

Zero standing charge energy tariffs are available. These tend to suit businesses that operate seasonally as their unit rates are higher. Before selecting this kind of energy tariff, you should ensure that it suits your business needs.

Businesses are required to pay 20% VAT and a fee for the Climate Change Levy. Businesses with low energy consumption may be eligible for discount. In some cases, they may be exempt.

Average business energy bill 

Here are the average consumption figures and costs by business type:

Business Type

Average Electricity Consumption (kWh)

Average Gas Consumption (kWh)

Total Bill (per year)

Micro business

7,500

5,000

£1,518

Small business

20,000

15,000

£3,664

Medium business

35,000

35,000

£6,563

Large business

90,000

75,000

£15,609

Industrial

250,000

500,000

£52,931

Many businesses across the UK are paying too much for their commercial energy. Business energy comparison will tell you if you are paying above average for your business energy. If your energy bills are close to the average costs, you could find a cheaper deal.

What can influence my business energy bill? 

Unit rates and standing charges are not the only factors that affect the cost of your business energy. The following aspects will influence your energy bills:

  • Wholesale costs. The cost of energy changes. Supply and demand has the largest effect on price. For example, energy costs can be higher during the winter and during peak hours. You can reduce the impact that wholesale price changes have on your energy bills by getting a fixed-rate tariff. 
  • Network charges. Network charges account for around 23% of your business energy bill. This covers maintenance, losses, transportation, distribution, transmission, and balancing costs. 
  • The Electricity Reform Policy. This is a government policy created to increase investment in low-carbon sources. It aims to make the UK’s electricity more secure and more affordable. 
  • World events. World events such as natural disasters, shortages, and conflicts can impact the cost of energy. These events can cause issues with accessing fuels and lead to an increase in demand. This can in turn make wholesale energy costs more expensive for energy suppliers.

How can I reduce my business energy bill?

There are many ways in which you could reduce your business energy bills. The most effective measure you can take is to switch energy suppliers. Many businesses pay a lot for their business energy. Switching suppliers and getting a cheaper deal can help to reduce your bills.

Love Energy Savings provide a free online comparison tool to help you compare energy prices easily. With a few details about your business, you can get a quote in seconds.

As well as switching suppliers, the following measures could help you reduce your business’ overheads:

For more energy saving advice, take a look at our Top Ten Energy Saving Tips for your Business.