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Understanding Your Business’ Energy Bill

As a business owner or manager, you do much more than looking over finances and checking whether the business is profitable or not. Naturally, there are a lot of other important things that you must check, consider, and analyze – all for the better functioning of your business.

Gas water and electricity - article about business energy bill 22For example, one thing that many CEOs forget to look at is the utility bill of their business – in short, how much their business pays for utilities and services related to energy usage.

This should be important to any owner/ manager, as they can enforce measures to reduce energy usage and, therefore, maximize their profit. For instance, managers stick to the same energy suppliers for years without looking more into their rates and how they changed, while alternative suppliers provide business gas prices from 2.27p per kWh in some cases.

Energy Bill Peculiarities

Naturally, domestic and business energy bills have a couple of things in common – but the ones that differ are important, especially for the one checking the bill.

As such, here are some of the things that should show up on any energy bill:

  • VAT – for a business, the VAT is 20%, unlike domestic customers that enjoy a VAT of 5%.
  • Fixed Profit, Admin, Charges – these fixed variables cover the connecting of your business to the distribution network, as well as the maintaining of admin and meters that are associated with your licensed supplier.
  • Carbon Taxes – such taxes directly affect the wholesale energy cost; they are billed separately.
  • Wholesale Energy Costs – the cost of electricity production.
  • Network Charges

The Most Important Parts

Of course, there’s more information that shows up on your energy bill than what has been mentioned above. For example, three of the most important parts of your business’ energy bill are:

  • The Standing Charge – this is the rate that you pay each day for energy, regardless of how much energy you use.
  • The Unit Rate/ Rates – this, on the other hand, is what you pay for each kWh of gas or electricity that your business uses.
  • The Contract End Date – this particular bit shows you when a certain fixed price period ends, and you’ll be given new rates.

It is also worth mentioning that a low unit rate doesn’t automatically imply that you pay the lowest amount possible for energy. In fact, it all depends on how much energy your business uses.

For example, if your business is a heavy user of electric energy or gas, it is essential that you look for a supplier with a low unit rate. On the other hand, a light user business would benefit from a low standing charge accompanied by a higher unit rate.

The Bottom Line

It goes without saying that the management team must understand all the company’s bills – and not only the energy one -, especially if they want to improve usage and save money on energy.

Moreover, they should also look into new suppliers/ providers once in a while, to make sure that they are getting the best possible rates for their business.

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Interesting related article: “What does Utility mean?