Why is my gas and electricity bill so high?
If you’ve had an unexpectedly high electricity bill, you’ll know how frustrating it can be. Unfortunately, the business energy market can be confusing at times so if you’ve found yourself stumped by a higher-than-normal invoice, you’re not alone. To help demystify your bills, here’s our expert guide on why your charges might be higher than you anticipate.
Why is my electric bill so high?
Lighting, equipment, machinery, computers, tills, photocopiers – the list of appliances draining energy in your business may be a long one. But before you rush into the staff kitchen and unplug the kettle, it’s important to understand exactly why your electricity bill is higher than usual.
There are usually three main reasons for an increase in your business electricity bill:
- your consumption has increased
- your rate has increased
- other charges are affecting your bill.
Consumption
Electricity consumption is measured in kilowatt-hours (kWh). To find out if you are using more electricity, you need to compare the usage in kWh to a previous bill. It’s best if you compare like with like, so it’s a good idea to use one from the same time period in the year. If you have used significantly more kWh in this bill, then your energy consumption has increased. To reduce your bills, make your business more energy efficient. This can include relatively cheap measures such as switching to LED lighting and raising staff awareness. You could also consider fitting occupancy sensors or intelligent heating and air conditioning (HVAC) systems. These measures cost more up-front but are designed to save money in the long term. Utility Bidder has put together an eight-step guide of clever ways to reduce your business energy consumption.
Rate
If you are using the same kWh of electricity as you did last year, but your bill is significantly more expensive, then the next possible explanation is that there has been an increase in your tariff. Some energy providers lure business customers in with low introductory rates, relying on the fact that you won’t remember to switch before their standard (read: expensive) tariff kicks in. The first things to look at are your standing charge and your unit rate.
- The standing charge is a daily fee that you pay for the supply of your electricity. You pay this each day regardless of how much energy you use.
- The unit rate is the amount you pay per kWh of electricity you use.
These rates can vary, and the best deal for your business will depend on the size of your business and what your typical consumption is. Our research has shown that 80 per cent of business customers are overpaying on their energy bills.
Other charges
As well as the tariff that you pay for the electricity you use, your business electricity bill includes other charges. In fact, only 44 per cent of the average business electricity bill is for the electricity supplied. The other 56 per cent is made up of ‘third-party costs’. These include transmission charges and contributions to government schemes. For example, every unit of energy your business uses is subject to a Climate Change Levy (CCL). There are exemptions if your business uses less than 1,000kWh of electricity per month or has a domestic element. These are costs that you can’t necessarily avoid by reducing your consumption, but Utility Bidder’s expert advisors can help find the best deal for your business.
What is the average electricity bill?
Data from the Digest of UK Energy Statistics (DUKES) shows that the average annual expenditure on electricity by a non-domestic consumer was £7,980 in 2018. The size of your business will affect your rate. If you use less energy, your bills will be lower, but you will probably also pay a higher price per unit than a high-use consumer.
Why is my gas bill so high?
Is it winter? If you have a large premises that needs heating, you can expect costs to soar during the winter months and cold snaps. The good news is that when the summer heatwaves hit, your gas bill should come back down. The Health and Safety Executive (HSE) recommends a minimum working temperature of 16 degrees Celsius, so don’t be tempted to turn that thermostat down too far or you might have a revolt on your hands. If you’ve been hit by a large bill, and are within one year of your contract end date, now is a good time to check what rate you are on. Shop around for a better deal – or let us do it and take the hassle out of finding the best business gas prices.
What would cause my gas bill to double?
First, double-check your meter reading. The bill could be inaccurate if it is based on an estimate or an incorrect reading. Check your thermostat and timer. Is your heating on constant? It doesn’t need to be. Make sure it is timed to coincide with when the premises are in use. An intelligent HVAC system could be worth considering to lower your bills. As with electricity above, check your rate and see if you have been switched onto your supplier’s Standard Variable Tariff (SVT). If you have, it’s time to renegotiate or switch.
