Information on business gas and electricity terms and contract types
BUSINESS GAS & ELECTRICITY
We are all focused on getting the best gas and electric deals when it comes to our businesses. One way to do this is making sure you have all the facts when it comes to understanding your energy bills and contracts.
As an energy broker we provide energy advice as well as business energy solutions. This section has information on business gas and electricity terms and contract types.
Comparing business electricity and gas prices.
3 most important things on your business energy bill:
Most competitive unit rates
Most competitive standing charges
What customers say about them
Contract end date
READING ENERGY BILLS
Single site electricity bill
Example of a commercial electricity bill for a single site.
How to read your single site electricity bill
1. Your site details
This will either show your address, or list the number of sites covered by the bill. You'll also see:
If the bill is for gas or electricity.
The dates the bill refers to.
This will show the charges applied to your account since your last bill.
2. Summary of charges
Here you'll see how much you owe and either the date you need to pay by, or when your business gas and electricity supplier will collect your Direct Debit.
3. Bill amount and due date
It’s important to quote this if you need to get in touch with your electricity and gas supplier.
Emergency contact details in the event of a gas leak or power outage.
Details of how to get in touch on the day you move and provide a final meter reading.
4. Your account number
5. Emergency phone number
6. Moving business premises
8. Your energy usage
This shows your estimated or actual energy use in kilowatt hours (kWh). If your bills are based on an estimated reading your business gas and electricity supplier will let you know. To avoid estimated reading, send your business gas and electricity supplier a meter reading.
ENERGY RATES & CHARGES
Under 20,000 kWh per year
Under 20,000 kWh per year
20,000 - 500,000 kWh per year
Under 20,000 kWh per year
20,000 - 100,000 kWh per year
kWh per year
100,000+ kWh per year
Calculating your annual cost
* Unit rate
Your final business gas and electricity bill will include the following costs:
Wholesale energy costs
Transmission Use of System (TUoS) charge
Distribution Use of System (DUoS) charge
Climate Change Levy (CCL)
What is a Kilowatt-hour?
A Kilowatt-hour (kWh) is the standard unit of measurement used by energy suppliers for both electricity and gas. A kWh is the amount of energy you would use if you kept a 1,000 watt appliance running for an hour.
After a hard day, you want to sit back and relax with your brew in front of the TV. What does it cost? Ok, so average kettle is 2.5 kW, takes 3 minutes to boil, at a unit rate of 17p, it has cost you just over 2p. Interested in the maths?
*365 days or 12 months (supplier dependant)
HOW TO READ A METER
How to find your MPAN Suppler Number
When you compare electricity prices, your energy broker or the energy switcher website will normally ask for the 'Meter Point Access Number', which is also called the MPAN or S Number.
What does a MPAN or S Number look like?
This number is 21 digits long
Only includes numbers
Top row of numbers tells the supplier what type of electricity you need
Bottom row identifies the location
Digits 9 to 21- what you need to switch supplier
How to find your MPRN Suppler Number
A MPRN number is your gas Meter Point Reference Number (MPRN).
What does a MPRN look like?
This number is 8-10 digits long
Only includes numbers
Find it on your bill, will start with the letter M
Why is my MPAN/MPRN number important?
MPAN number uniquely identifies your supply point to your small business energy supplier.
This number makes sure your electricity supplier knows it is supplying the right property and billing the right meter. It may also help to speed up the switch to the new electricity supplier.
Where can I find my MPAN/MPRN number?
By law, your MPAN number will always be printed on your bill. Depending on your supplier your MPAN number may be on different parts of your bill. If you cannot find your MPAN number it may be in small letters on the back of the bill. Some suppliers will only display 13 digits, and not the whole 21 digits.
You will not find your MPAN or MPRN number on the meter.
The serial number stamped or printed onto the meter is not your MPAN or MPRN number.
Your MPAN or MPRN number will not be the same as your customer reference number.
If you cannot find your MPAN or MPRN number or don't have a bill, contact your energy supplier. This type of information is held by the electricity supplier's Meter Point Administration Service departments (MPAS).
What do I do when I don't know who my gas and electricity suppliers are?
If you have just moved into the property and don't know the name of the company that supplies your property with electricity, then your first task is to call your Distribution Network Operator (DNO). The DNO in the Manchester area is Electricity North West Ltd, telephone number 0800 195 4141
SWITCHING ENERGY SUPPLIER
Checklist to switch electricity/gas supplier
Email the energy (electricity / gas) bills you can find to Energy PEAK
Energy PEAK estimate your usage based on bills provided or you sign of Letter of Authority (link to blog, although not uploaded yet) for accurate usage – please remove LOA section from here
Energy PEAK send you a quote based on your requirements detailing the difference between the contracts, our fee and any other relevant information
You decide what contract you would like and Energy PEAK handles rest
Letter of Authority
When you’re ready for us to arrange your next business electricity and gas contract it’s important that we’re able to access your account information with your current energy supplier. This ensures that we have all the right details to change your supply for you and it’s done by completing what’s called a ‘Letter of Authority’ (LOA).
Letter of Authority is a way to authorise us so Energy PEAK can work on your business gas and electricity supply arrangements. It enables us to do a range of things for you such as:
Confirm your existing tariff details
Check consumption levels
Serve a contract termination notice on your behalf
A Letter of Authority does not enable Energy PEAK to agree a new contract on the customer’s behalf. The terms are clear in LOA. Energy PEAK can only carry out what is in those terms.
Types of commercial energy contracts
A fixed term tariff means that your unit price for business gas and electricity will stay the same for the length of your contract. This is helpful for budgeting and it offers a level of security against price rises in the wider market. Fixed-term contracts mean that your business will not benefit from any drop in the price of wholesale energy. Exit fees make it costly to switch suppliers mid-contract. Before your fixed term comes to an end, shop around to find the best gas and electric deals available. Always avoid being rolled onto expensive out-of-contract rates.
The unit rate you pay for the energy you use can vary depending on market activity - if prices go up, so will your gas and electricity bills. That means your bills could increase, even if you're using the same amount of energy. On the flipside, your bills could also go down. Before signing up to a variable rate deal weigh up the pros and cons.
Energy costs: fixed-term versus variable tariffs
The largest cost on your energy statement will be for the gas and electricity you've used.
This is charged at a rate per kWh (kilowatt-hour) based on your meter readings. Your supplier may use an estimate, if they haven't received a meter reading from you. It is important to get an accurate meter reading especially if you have put business energy solutions in place to improve energy efficiency.
If you're a large business with a half-hourly meter, your meter readings will be sent to your business gas and electricity supplier automatically. The rate your business is charged per kWh of energy depends on your tariff. The two most popular kinds of tariff are fixed-term and variable rates. There are pros and cons to each.
This is a contract for businesses who haven't switched since the energy market deregulation came into effect.
If you don't arrange a gas and electric deal before your current one expires, some business gas and electricity suppliers will automatically sign you up to another deal. This plan will usually on more expensive gas and electricity rates. If you own a micro-business, your business gas and electricity supplier can't roll you over like this. Always compare business gas and electricity deals and switch at renewal.
Types of commercial energy charges
A standing charge is a daily fee for keeping your business property connected to the energy network. It's a bit like paying for line rental on your phone.
You'll pay a fixed price per day, no matter how much gas or electricity your business uses.
That means you'll have to pay a standing charge even when you're not actively using gas or electricity.
Standing charges vary by business gas and electricity supplier, and will be laid out as part of your tariff. It's an important thing to look at when you're comparing business energy deals.
This is the rate you pay for the gas and electricity you use.
Each unit is measured in kilowatt hours (kWh) and is fixed if you sign up to a fixed rate deal.
Gas and electricity suppliers pay other companies to maintain and operate the energy network.
These third-party costs include:
Also known as Transmission Use of System (TUoS). This charge reflects the cost of maintaining the infrastructure used to get massive amounts of energy from where it's generated to regional distribution network operators. This is paid to National Grid.
Also known as Distribution Use of System (DUoS). This reflects the cost of delivering energy from the National Grid network to your property. This is paid to one of six distribution network operators in the country, depending on your region.
Also known as Balancing Use of System (BSUoS). This is a charge paid to National Grid for keeping the amount of power generated and the amount of power used in balance nationwide.
Settlement & agency charges
These reflect the costs of installing, maintaining and reading gas and electricity meters as well as keeping the data collected secure. This is paid to data handling and meter operator companies.
There are also green levies like the Renewable Obligation to factor in. This money goes to HM Revenue & Customs.
All of these costs are incurred by your gas and electricity supplier and are usually 'passed through' to customers like your business. Pass-through charges are approved every year by the energy regulator and may appear as a separate line on your business gas and electricity statement.
Some suppliers add their pass-through costs as an extra charge on top of your business tariff. This makes it more difficult to compare gas and electricity business prices and can come as a nasty surprise on your first statement.
Government Taxes and Levies
VAT is a government tax which is added straight onto your business gas and electricity bills. Every business will be charged at the standard rate of 20% unless you qualify for a reduced rate of 5%.
You're eligible to pay a reduced rate if any of the following apply:
Your business is a registered charity.
You only consume a small amount of energy. This is defined as using less than 33 kWh of electricity per day (1000 kWh per month) or 145 kWh of gas per day (4397 kWh per month). You can check how much your business uses on your business gas and electricity statement.
You use your business energy for domestic or residential purposes. Boarding schools or care homes might qualify for this reason. You can read more about 'qualifying uses' here. If you use 60% or more of your energy for domestic purposes, the discount will apply to your whole bill. If it's less, the discount will be applied to the proportion used for domestic purposes only.
If your business only uses a small amount of energy it should be eligible for a reduced rate. Your gas and electricity supplier should apply this discount to your energy bill automatically. The reduced rate will apply to any month your business gas and electricity usage falls below the threshold.
If you qualify for any other reason, you will need to register using a VAT Declaration form, which is available from your small business energy supplier. This form will also help you to claim a refund for any recent overpayments you’ve made on business energy VAT.
Even though energy is a business purchase, the money you spend on gas and electricity can't be claimed back as a business expense.
Organisations that qualify for a VAT discount will usually be exempt from other government levies too.
Climate Change Levy (CCL)
The Climate Change Levy (sometimes referred to as CCL) is an environmental tax. It was introduced by the government to encourage businesses to reduce their energy consumption and operate in a more energy efficient way.
Even businesses using a green energy supplier need to pay for CCL. Your supplier will charge you a set rate per kWh to cover this tax. The standard rate is set by the government and changes every year on 1 April. This payment will be clearly labelled on your gas and electricity bill.
From 1 April 2020, the charge for electricity is £0.00811 per kWh, and £0.00406 for gas.
From 2021, it’s £0.00775 per kWh for electricity, and £0.00465 for gas.
If your business pays the reduced rate of VAT, you'll be exempt from CCL payments, too. Energy-intensive businesses with Climate Change Agreements (CCA) are also eligible for heavily-reduced CCL payments. That's because these agreements show a commitment to reducing carbon emissions on an industrial scale.
The discount for businesses with a Climate Change Agreement is:
Electricity: 92% from 1 April 2020
Gas: 81% from 1 April 2020
Find out more about CCAs on the .gov website.