If you’re not careful, you could end up paying significantly more than necessary for your business gas and electricity. With so many suppliers and tariffs available, it can be difficult to know which is the best option for your company.
To give you a clearer idea of what represents good value for money, this guide details the average business energy costs for a range of different types of organisation. It also outlines the expenses and information you will find in your gas and electricity bills, as well as payment methods and – crucially – ways to lower your spending on energy.
What business energy rates should I be paying?
The rates you should be paying for your business energy depend on a variety of factors, including the size of your premises, the number of employees you have, the type of equipment you operate and how efficient your systems are. For example, the average gas bill for a small business and the average office electricity bill for a company with only a few workers are likely to be much lower than the bills incurred by large businesses with bigger premises.
Business energy rates
A number of costs are incorporated into your gas and electricity bills, which can make them appear complicated. This includes the cost of wholesale energy and charges imposed for the Transmission Use of System and Distribution Use of System. Metering costs and VAT (usually charged at 20 per cent) are also charged, and supplier margins are added too. This refers to the amount that your supplier charges you to cover their costs and make a profit. Your bill is also likely to include a Climate Change Levy charge, which is designed to encourage companies to improve energy efficiency and lower their carbon emissions. However, depending on how much renewable energy you use, you may be exempt from this.
One of the main figures on your bill that you should pay close attention to is your usage charge in kilowatt hours (kWh). This is simply the sum you are required to pay for the amount of gas or electricity you have used in the billing period. As mentioned previously, this varies significantly between different types of companies.
Average business gas & electricity usage
Average business gas usage
In the UK, microbusinesses use on average between 5,000 and 15,000 kWh of gas a year and their average annual gas bills come in at between £400 and £820. Small businesses register a higher typical usage at between 15,000 and 30,000 kWh, with bills tending to vary between £820 and £1,458 a year. Medium-sized business usage averages between 30,000 and 65,000 kWh, with annual bills coming in at between £1,458 and £2,239. Unsurprisingly, large businesses use the most gas of all, averaging around 75,000 kWh a year. Although larger companies tend to benefit from the cheapest per unit gas rates and often have bespoke tariffs, they can still spend significant sums of money because of the sheer amount of gas they use.
Average business electricity usage
When it comes to electricity usage, microbusinesses in the UK are averaging between 5,000 and 15,000 kWh per year at a cost of between £900 and £2,244, while small companies are averaging between 15,000 and 25,000 kWh, meaning their bills typically come in at between £2,367 and £3,660. Medium-sized enterprises are using an average of 25,000 to 50,000 kWh, setting them back £3,774 to £7,234 each year. At the top end of the scale, large businesses are consuming an average of 90,000 kWh of electricity every 12 months. As with gas, while these companies tend to get the most competitive rates due to their size, they can end up paying significantly more overall for their electricity due to the scale of their usage.
What information is on my business energy bill?
If you sometimes get confused by the various different numbers and details on your businesses energy bills, you’re by no means alone. These documents contain many different pieces of information and they can be perplexing if you’re not sure exactly what you’re looking at.
However, as long as you can pick out the key information that is important to your organisation, you should be able to get a clear understanding of what you are being charged for.
Your energy bills will include all of the following details:
- The bill date – the date the bill was sent to you
- The bill number – a reference number that your supplier uses to identify the bill
- Account number – the unique number given to your account by your supplier
- VAT number – the VAT number registered to your company
- Billing period – the time period that you are being charged for in the bill
- Contract details – a summary of the agreement you have in place with your supplier
- Type of charge – a specification of whether your bill is based on estimated or accurate usage figures
- MPAN/MPRN – the number used by your supplier to identify the energy meter installed at your property
In addition to this information, your bill will set out the charges you have incurred. These include:
- Billing period charges – the sum you’re being charged during the billing period
- VAT charges – the sum you owe (if anything) for this tax
- Outstanding charges – the money you owe (if anything) from previous bills
- Total amount due – the sum of the costs listed above, this is the entire amount you owe
- Cost breakdown – your bill will also include a breakdown of the charges you have incurred so that you have a detailed understanding of where your money is going
How can I pay my business energy bill?
There are a number of options when it comes to paying your business energy bills. For example, you can do this by online bank transfer, which simply involves making a BACS or online bank transfer to settle the exact amount owed. These payments are not automated, so you will need to remember to make the transfers each month. Another option is direct debit. This is an automatic payment that goes from your account to your supplier. Direct debit is a popular method thanks to its simplicity, and the fact that some suppliers offer discounts to customers who pay in this way. However, because bills differ depending on usage, it’s up to you to ensure that you pay the correct amount.
Another option is to pay through the Post Office. Some energy bills are provided with a bank giro slip that you can simply fill in and take to your local Post Office branch. Or perhaps you would prefer the option of paying by cheque. However, if you choose this approach, bear in mind that because it can take a number of days for the post to arrive and the cheque to clear, there is a risk that you will incur late fees if your payment is not processed in time.
How to lower your business energy bills
Having a clear idea of how much similar businesses are paying for their energy, for example being aware of the average cost of electricity per month for a small business, can help you to decide if you’re on a competitive tariff. If you think you’re paying more than you should be for your energy, it may be time to make a switch. As a specialist energy comparison and switching service provider, Utility Bidder can make it quick and easy to find a tariff that suits you, and we will take care of the switching process on your behalf.
There are other ways to lower your business energy bills too. One of the most important is to find ways to reduce your energy usage as a company. The actions you take could range from making major changes like upgrading your equipment to more efficient models and improving the insulation in your building, to modest steps like putting posters up around your workplace reminding workers to switch lighting and equipment off when it’s not in use. To help you identify areas of potential wastage, you could conduct an energy audit. As well as saving you money, cutting your energy usage will help to make your business more environmentally friendly.
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