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Understanding your Business Electricity Bill

It's not uncommon for business electricity bills to end up at the bottom of a draw or file and never really looked at.

If you haven't taken a closer look at your commercial electricity bill in a few months you could be missing something that is costing your business a lot of money.

An uncertain market with rising business electricity prices means it has never been more important to pay attention to your energy costs.

What Costs Do You Need To Pay Attention To On Your Electricity Bill?

We all want to save money. One of the best ways to do this is to understand where you are spending money.

Whilst you're most likely to let your eyes wander to the final amount you have to pay, the devil is in the details.

Of course, the most important charges that you need to be aware of on your business energy bills are the unit costs and standing charge.

What Is A Unit Cost?

This is the cost you pay for every kilowatt hour (kWh) of energy you use. For example, a small business using 10,000 kWh per year at a unit rate of 26p would cost £2,600 (other costs will apply). You can find more information on unit rates in our definitive guide to energy prices per kWh.

What Is A Standing Charge?

Nearly all business electricity rates include a standing charge. This is the cost charged by your energy supplier to cover the cost of having energy supplied directly to your premises. You can get business electricity tariffs without a standing charge but the unit rate will usually be higher than average to compensate the loss.

What Is On My Business Electricity Bill?

Business electricity suppliers will provide you with lots of information when it comes to billing. Most of it is purely for reference and isn’t important to understanding your bill. This information includes:

  • Addresses and contact details
  • Energy bill issue date
  • Amounts of previous bills
  • Customer reference numbers

All of this information is worth noting, but not essential to your bill.

The information that really matters is:

  • Previous energy usage information
  • Estimated / actual meter readings
  • Standing charge
  • Unit cost
  • Total cost (in Kilowatt Hours kWh)
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VAT Charges

Most businesses pay a flat rate of 20% VAT on the cost of their business electricity supply.

There are certain exceptions. For example you will pay a lower rate if you are a non-profit or charity.

Smart Meter Charges

Most energy suppliers provide a smart meter as standard. These costs will always be recovered from the supplier over the duration of contract.

However, your electricity supplier may list this charge on your bill.

Even with the charge, it is often worth the cost of a smart meter to ensure you're paying the right amount for your energy consumption. A smart meter ensure you're not being charged based on estimates and will save you physically providing a meter reading every month to your electricity supplier.

The previous energy usage information shows you how much energy you have previously used. This can either tell you the number of units of energy you used last month, or the amount you have used in total. This should help you determine whether you used more or less energy than usual.

Your meter readings can be either estimated or actual. Estimated means that your energy company have estimated how much energy they think you are likely to use. Actual means that either you or a meter reader have taken a reading from your meter. You can find out more about how to read gas and electricity meters here.

The total cost is your final bill. This adds together both the standing charge and the total units you have used.

How Much Is The Average Of A Business Electricity Contract?

Business electricity prices depend on a variety of factors. This includes the electricity supply you demand, location of your business and the wholesale energy costs.

Here's a look at some averages:

Business size

Annual Usage

Unit Price/kWh

Standing charge

Annual Bill

Micro

8,000 kWh

20.06p

27.40p

£1,705

Small

20,000 kWh

20.57p

26.83p

£4,212

Medium

40,000 kWh

18.06p

26.41p

£7,320

Large

80,000 kWh

18.00p

26.20p

£14,496

These prices are only averages – you could still save significantly on these by finding the right business electricity supplier for your business.

What Affects My Business Electricity Bill?

There are many things that impact your business electricity prices. Business energy rates change daily, and the best way to keep up to date is to compare business electricity prices.

Here are the main things that impact the price of your business electricity tariffs. This is not a comprehensive list.

Wholesale energy costs

The price your energy supplier pays for electricity before providing your business with supply is the main contributor to price changes.

World events can play a huge part in setting these wholesale prices. Natural disasters, conflicts can all cause a huge demand in energy which means we will all pay more for our electricity supply.

Credit rating

Your credit rating impacts the business electricity tariff you can access. Some electricity suppliers may only offer the best business electricity prices to companies with a certain credit rating.

When you compare business electricity prices, you will be presented with a variety of business energy options available to your company.

Overall, the main thing that impacts your business electricity prices is supply and demand. If more people are using electricity in the country at the same time, then your prices may rise.

Most power in the UK still comes from fossil fuels. While green energy usage is growing, fossil fuels still produce a lot of our energy. This means that international events can affect prices. Disasters, conflicts and unexpected incidents can all increase your energy prices.

How Can I Pay Less?

Historically, companies would switch business electricity to save money on their previous energy bills. As the current market is seeing rapidly rising electricity prices, business owners have switched their mentality to saving against future price increases by opting for shorter fixed-rate energy tariffs. 

Different energy providers can suit different businesses more or less. Finding the right supplier for your business can see difficult. However, with Love Energy Savings, it doesn’t have to be. We specialise helping business like yours switch commercial electricity quickly and easily.

When you get in touch with Love Energy Savings, we help you compare the deals and offers available to you, so you can choose the supplier that suits you.

To find out how much you could save today, compare energy prices with Love Energy Savings.

To compare business electricity and start your switch today, use our free online comparison tool.

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