When it comes to running a business, there are many bills which you need to pay and finding time to understand exactly how they are calculated can seem difficult. However, when it comes to energy bills, just a few minutes examining your bills could help you save money. If you are unsure what the various sections are on your business energy bill and why they are important, this quick guide will take you through everything you need to know.
There are some areas of your energy bills which are important and examining these closely will help you understand the various elements which make up your total bill, so you can quickly see whether your bill is more than it should be. Costs of business energy can quickly add up, especially if you take your eye off your bill and slip into a less competitive contract.
The standing charge is the amount your business is charged for each day that you receive the energy supply. This rate will not change irrespective of the amount of energy your business consumes. All business electricity bills will list the standing charge, however not all business gas tariffs will have a standing charge. Although, it is worth considering that tariffs without a standing charge are likely to recoup this cost by charging higher unit rates.
The unit rate listed on your energy bill is the amount you pay for each kilowatt hour of gas or electricity your business uses. Although it may be tempting to choose a supplier which offers the lowest unit rate, you also need to consider the standing charge, which could be more expensive than another supplier. If your business uses a lot of energy, a low unit rate will be more preferable than a higher unit rate and a low standing charge.
All business energy suppliers are required to list your contract end date on your energy bills, which is the date which your current contract ends. This is designed to make it easier for you to compare energy deals and opt for the most competitive supplier for your individual energy requirements. If your fixed price deal ends and you fail to arrange a new contract, the supplier may switch you to a more expensive deal.
The Climate Change Levy (CCL) is a government charge for every unit of non-renewable energy which your business consumes. If you are signed up to a renewable energy tariff, you will not be charged the CCL. In addition, if on average your business uses less than 145 kWh of gas and 33kWh of electricity per day, you will not have to pay the CCL.
The majority of companies are required to pay 20% VAT on their business energy usage, however if you are exempt from the CCL levy you will only be charged VAT at a rate of 5%.
When it comes to business energy there is no one size fits all approach to gas and electricity rates, so it is very hard to provide an average energy cost. Some businesses opt for a fixed rate tariff, whereas others choose variable rate tariffs, and every business will be charged different unit rates based on their own specific circumstances.
However, it is important to keep a close eye on the important sections of your energy bill, to ensure you do not pay more than is necessary.
Here at BusinessComparison we have partnered with both large- and small-scale energy suppliers, so your business has access to the most competitive deals. To find out more about comparing business energy deals, please contact our team today.