What should you look out for on your business energy bill?
Business energy bills are often very detailed, and they can be difficult to fully understand – but they don’t have to be! Here’s our quick guide to interpreting your energy bills. We will kick things off with three things you first need to look for when you get your energy bill:
- Unit rate (measured in kilowatt hours) is the total you pay for the electricity & gas that you’ve used. Having a lower unit rate = paying less you pay for you’re energy
- Standing charge – is a fixed rate that is charged by your supplier to cover the costs of supplying energy. The lower the standing charge – the lower your energy bills!
- End date of your contract – this is important to know as it will give you a better understanding on when you can switch to a better energy deal. Why is this important? You can’t arrange a new business energy deal if your current one isn’t in the switching window (typically a few weeks or months before your contract’s end date). When you use Thermatic Energy Services to switch your business energy, we will keep our eyes on your contract end date and proactively search for the very best deals on your behalf, saving you both time and money – leaving you buzzing with joy!
If your standing charges and unit rate is high, then this is almost certainly why your energy bills are high.
To help you work out whether you are overpaying on your energy, here are some numbers to get crunching.
What charges are included in your business energy bills?
When you have a gander at your energy bill you’ll discover there are a few sneaky separate charges which add up to the total amount you have to pay (cheeky!). These include:
- Wholesale energy costs
- Transmission Use of System (TNUoS) charge
- Distribution Use of System (DUoS) charge
- Climate Change Levy (CCL)
- Metering costs
- VAT on gas and electricity
- Supplier margins
What is the wholesale cost and how does it affect your business energy bill?
Did you know that a large chunk of your energy bill is made up of the cost your energy provider pays to purchase your electricity and gas from wholesale suppliers? They then make sure you don’t run out of electricity or gas throughout the period of your contract by buying the energy they expect you to use in advance.
This does however mean that you can’t exit your energy deal early (not without having to pay your remaining contract), but these fixed-price deals do protect you against increases in wholesales prices which means they won’t have an instantaneous bearing on your energy bill.
What is the Transmission Use of System (TNUoS) charge?
Moving and supplying energy isn’t cheap and the costs that your energy supplier gets are included in your business gas and electricity bills.
Energy suppliers also need to cover the cost of upgrading and maintaining the National Grid, which are again worked into the energy bill you pay (these will vary pending on your businesses location as different zones place different levels of demand on the network and are therefore billed accordingly).
What is the Distribution Use of System (DUoS) charge?
The DUoS charge are applied by the Distribution Network Operators (DNO), these are companies which are licensed to distribute electricity in the UK. The charges which are applied are from a range of factors such as night and day charges and the max supply requirements of sites which make up the network.
What is The Climate Change Levy (CCL)?
The Climate Change Levy (CCL) was introduced by the UK government in 2001 as a tax, with the aim of encouraging sectors to cut greenhouse gas emissions and improve energy efficiency which is paid by non-domestic energy users on a per-unit basis. It’s basically designed to act as an incentive for businesses.
What are metering costs on my business energy bills?
Energy meters are actually complex bits of kit operating complex functions, and they must be paid for and maintained as a physical asset. If you don’t have a smart meter, you have to pay towards having your meter read.
What is the rate of VAT my business energy bill?
VAT on electricity and gas bills for businesses are usually charged at a rate of 20%. Some businesses will be able to pay a reduced rate of 5% VAT on energy bills if they use less than what is known as the de minimis threshold.
What are the supplier margins on my business energy bill?
Energy suppliers are run like any other profit-making business, and the amount they make from your custom is shown as the ‘supplier margin’ – it’s not just profit though, marketing costs, acquisition costs, administration costs all being covered before net profit is taken.
If you’d like to speak to one of our helpful and friendly advisers about your business’ energy bills and management call us on 0161 541 4131 or send us an email: info@thermaticenergy.theauditlab.com.
Who Are Thermatic Energy Services?
We work with end-user clients to help them achieve their energy management targets. Our main focus is giving our customers visibility to their systems and data to allow them to make actionable decisions to reduce their energy consumption, improve their building operation and achieve their sustainability targets.
