Every business receives an energy bill, but not every business owner or manager takes the time to delve into the billing details.
This means that many businesses are missing out on energy savings opportunities through out-of-contract tariffs, inaccurate billing and a lack of understanding about energy consumption patterns and potential efficiencies.
This guide to business energy tariffs will help you understand your energy bill better, helping you manage your business energy costs more efficiently as a result.
How to read your energy bill
An energy bill may seem complicated at first, but once you know what you are looking for, making sure that your invoice is accurate is be easier than you may think.
Although energy bulls differ slightly in structure from supplier to supplier, they all include similar information.
- Bill date
- Bill number
- Billing period
- VAT number
- Your account number
- An outline of your energy contract details
- MPAN/MPRN number: unique reference numbers used by your supplier to identify your property and your meters.
- The type of reading your charges are based on – accurate (meter readings) or estimated?
- Outstanding charges from previous energy bills:
- Charges for the billing period based on your consumption
- Standing charges
- VAT charges
- Total amount due
Remember that your energy bill is comprised of two types of charges:
- Standing charges – a charge for the physical supply of gas and electricity to your property and a contribution towards the maintenance costs of the national grid. This amount remains the same every month over the contract period.
- Unit charge – the amount for each unit of electricity or gas you consume
You can find a graph to help you understand your energy bill on the Smarter Business website.
The different types of energy contracts
The type of energy contract you choose will depend on your business type and needs.
- Fixed-term contract– allows you to set a fixed amount for your per unit energy price for the duration of your contract.
- Flexible contract– your unit rate will be linked to market activities and can fall or rise accordingly.
- Deemed rate contract– arranged for customers with no formally agreed contract. These contract rates are usually more expensive.
How to pay your bill
The various methods to pay for your energy will usually be listed on your bill. These could include:
- Direct debit
- Debit or credit card
Reliance on estimates, tariff errors and overcharging on a supplier’s behalf could mean that you are paying more than you should for your gas and electricity. That’s why invoice validation should be an essential aspect of your business’ energy management strategy. Your business should regularly:
- Check your bills against contract rates
- Validating meter charges
- Analyse standing charge
- Conducting monthly bill validation
This will ensure that you only pay what you are contracted to pay.