There are a variety of factors that make up your business energy bill. It is important to understand these factors to help inform your decisions when your contract comes to an end. Below we have listed some of the charges that you can find on your energy bills:
This is the total you pay per kilowatt hour (kwh) for your business gas and electricity. Most of your energy bill will be made up of your kilowatt-hour usage multiplied by the unit rate.
The standing charge is a charge that most energy suppliers include on your energy bill. The standing charge covers the cost of keeping your home or business connected to an energy supply, conducting meter readings and maintenance.
The current UK VAT is set at 20%. However, some products and services are charged at a reduced rate of 5%, and some are completely exempt from VAT. Your business will be eligible for a reduced rate if:
- Your usage needs to average less than 33kWh a day, or 1,000 kWh a month for business electricity
- Your usage needs to average less than 145 kWh a day, or 4,397 a month for business gas
Climate Change Levy (CCL)
The Climate Change Levy (CCL) is based on the kilowatt hour (kWh) units of usage. This was introduced by the UK government to promote greater energy efficiency and reduce gas emissions. If you are eligible for the reduced 5% VAT rate, you will not pay the Climate Change Levy.
The cost of maintenance to the gas and electricity supply networks will also be found on your energy bill. These charges can fluctuate and can increase your bill, and may include:
- Transmission Network Use of System (TNUoS)
- Balancing Services Use of System (BSUoS)
- Distribution Use of System (DUoS)
Your energy suppliers may list these separately on your energy bill.
These costs are related to the maintenance of your energy meters, whether you have a traditional or smart meter. Energy suppliers normally include this on your energy bill rather than being an upfront cost. Check out our guide on smart meters to find out more.
Additional government policy costs and fees
These additional government policy fees may be passed on from your business energy supplier. These can include:
- Renewable Obligation Certificates (ROCs)
- Contracts for Difference (CfDs)
- Feed in Tariffs (FiTs)
- Capacity Market (CM)
Similarly, to network fees, depending on your energy suppliers, these fees may be shown differently on your bills.