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How to understand your business electricity bill

For many of us, business electricity bills can be a little confusing. But they don’t have to be. 

While it’s tempting to simply skip straight to how much payment is due, you can avoid a lot of stress — and even find ways to cut your bills down — by getting to grips with the important information on your statement.

In this useful guide, the experts at Love Energy Savings explain every term and number you’ll find on your electricity bill. We also provide simple answers to the questions you were too afraid to ask!

 

1. Billing period

The first thing you’ll see on your business electricity bill is usually the billing period. This tells the period of time that you’re being billed for. For example, a billing period of 1st January to 31st January refers to the energy you used over those 31 days. 

The bill date is the day on which the bill was originally sent out. If you receive a bill with a bill date older than a few days, it could have been delayed in its delivery. In this case, you should contact your supplier to inform them you’ve received your bill late, which could impact your ability to pay it on time. 

 

2. What you need to pay

This is, understandably, the most important part of your electricity bill. This section of the bill should include a number of figures:

  • Charges this period — How much you pay for this period of energy usage before VAT is added. If you’re on a fixed tariff, this may be the same number each month. 
  • VAT cost — The amount of value-added tax that will be added to your charges for the billing period. While domestic customers in the UK only pay 5% VAT on electricity, the majority of businesses have to pay 20% VAT. The exceptions to this rule are if you’re a registered charity or a not-for-profit organisation. Speak to your supplier if your VAT cost is different from what you expect it should be. 
  • Discounts — Some suppliers will offer you a small discount for things like setting up a Direct Debit. 
  • Total payment due — The charges you’ve incurred this period with VAT added on top and any discounts reducted. This is the figure you’ll need to pay your supplier.
  • Payment due date — The date by which your supplier needs to have received payment in full for the bill. If you fail to make full payment before this date without notifying your supplier of any mitigating circumstances, you could incur fines.

 

3. Energy usage

Your bill will include a breakdown of the electricity you’ve used over the billing period.

Here are the key metrics you’ll find on your bill and what they mean:

  • Kilowatt-hours (kWh) used — This is the number of units of electricity used over the billing period. A kilowatt-hour is a measure of electrical energy that equates to using one thousand watts for one hour. For example, a kettle uses 1200 watts per boil and takes 125 seconds to do so, meaning it uses 0.04 kWh.
  • Unit price — This is the amount you’re paying for each kWh you use. If you’re on a fixed-rate tariff, you’ll have agreed how much you’ll pay per kWh at the beginning of the contract.
  • Standing charge — A daily charge you pay to cover the operational costs of getting electricity to your business. 

Though it’s rare for an electricity bill to be incorrect, it’s worth a few seconds of your time to quickly calculate what your charges should be and compare it to what you’ve been billed.

Here’s an example of how that might look: 

 

Billing period

1st-31st January

 

Standing charge

23p per day

Subtotal

£7.13

 

Energy consumption

1,000 kWh

Unit rate (price per kWh)

12.39p 

Subtotal

£123.90

 

Total charges (before VAT)

£131.03

 

To learn more about how your business electricity bill is calculated, see our electricity pricing guide.

 

4. Meter readings

Along with your electricity usage, your bill will include meter readings from your property. This sections will detail:

  • The latest meter readings
  • The dates these readings were received
  • Whether or not your meter readings were taken or estimated

If you didn’t submit your own meter readings, it’s likely that your supplier has estimated your bill based on your usage history. If you believe the estimate is too high, however, you can submit your own meter reading after the bill has been received. 

 

5. How to pay

When you set up a business electricity contract with a supplier, you’ll often agree up-front how you intend to pay. However, there are often multiple ways to pay your electricity bill.

  • Direct Debit — If you’ve set up a Direct Debit with your supplier, your bills should be paid automatically (granted there is enough money in your business’s bank account on the payment date). Many suppliers will even often a small discount for setting up a Direct Debit. It will often state on your bill if you have an active Direct Debit.
  • Invoice — Businesses that are mindful of cashflow will prefer to pay by invoice. Your electricity bill should include the bank details of your supplier: their account number and sort code, as well as advice on what to state on your payment reference. There may also be a link for you to pay via an online portal.
  • Payment slip — Some businesses still prefer to pay their electricity bills using a payment slip. You’ll often find a payment slip included with your bill which you can use to pay your bill at a bank or by post.

 

6. Reference numbers

Besides from usage stats and a summary of your charges, you’ll also find several reference numbers that will come in handy if you have any issues with your bill.

  • Your business reference number — Suppliers may request this from you when discussing your account over the phone.
  • Your supplier’s electricity supply number — This is a 21-digit number which usually starts with an ‘S’. It’s also known as a Meter Point Administration Number (MPAN). You can learn more about MPAN numbers here.
  • Your supplier’s contact details — Suppliers will often list specific numbers to quickly connect you with the customer service department responsible for handling billing issues. 

 

Frequently asked questions (FAQs) about business electricity bills

How is my electricity bill calculated?

Your bill is calculated based on the number of kilowatt-hours (kWh) of electricity you have used within the billing period, plus the sum of the daily standing charges (for example, a 70p standing charge over 30 days would cost you £21.00). You’d also have to pay VAT on top of the total, which is normally 20% for businesses.

Your energy usage statistics for the billing period are taken from meter readings. These are either submitted by you or estimated based on your previous usage.

 

What does ‘CR’ mean on a bill?

‘CR’ on an electricity bill means ‘In Credit’. This sometimes happens when you pay for more energy, in which case, you carry over ‘credit’ to your next bill. For example, if you agree to pay £100 for electricity and you only use the equivalent of £80, you’ll see CR £20 on your next monthly bill. 

On the other hand, you may sometimes see ‘DR’ on your bill. This means you’re ‘in debit’, which happens when you pay for less electricity than you actually use. For example, if you agree to pay £100 for electricity and use £120, you’ll see DR £20 on your next monthly bill.

 

Why is my electricity bill so high?

You may sometimes find that your supplier has charged you far more than you expected to pay. The most common reason for a higher-than-expected bill is that you’ve used a lot more electricity than was originally planned. You can avoid this in the future by switching off energy-intensive appliances when they don’t need to be used. 

If your charges are higher than you expect but your usage is consistent, it could be that your supplier is trying to claim back the debt you’ve accrued on your account. If you’ve been in debit for a while, your supplier may temporarily increase payments to get your account balance back to zero. In this scenario, a supplier will normally write to you first to notify you of the changes.

Though rare, it is possible that your meter is faulty and therefore giving the wrong readings. Alternatively, your supplier’s estimates may be a lot higher than the reality; in this case, submitting an up-to-date reading may help lower your electricity bills.

 

Can I check my electricity bill online?

Yes — today, most suppliers have an online portal that allows you to view your most recent business electricity bills. Many will also show you previous bills, allowing you to quickly check over invoices issued historically to help with your accounting. 

 

Can I pay my electricity bill in instalments?

Many suppliers will be reluctant to let you pay each of your bills in small instalments as it increases the risk of you failing to pay in full. However, if you’re struggling to pay your bills with your current system, it’s a good idea to contact your supplier to discuss the options available to you. 

 

Can I pay my electricity bill in cash?

Yes, though you’re likely to miss out on the most competitive tariffs since these are often reserved by users who choose electronic payment. You may also pay extra fees, such as bank handling fees. Paying by post also means you’re more at risk of incurring late payment fees, as postage can take 3-5 days to reach your supplier.