Just like homeowners, most businesses need electricity and gas. The current that flows through the sockets is the same, but energy suppliers bill commercial customers differently. Unfortunately, this can be confusing to many business owners.
Regardless of whether you have a small or large business, it’s important to know your invoice, how energy suppliers break down the invoice, and what you should expect to pay. This article discusses the key things included on your business energy bill.
The key parts of the business energy bill
One of the key parts of your energy bill is the unit rate. A unit rate can be measured in kilowatts per hour, and this is the price that gas and electricity suppliers charge you depending on the amount of the energy usage.
Ideally, the more energy you use, the more cash you have to pay. This is the reason why it’s a good idea to reduce your energy consumption so that you can lower your energy bill. On the other hand, if you decide to begin on a cheaper unit rate, then you can be paying much less for the energy consumption.
A standing charge is like a domestic bill, but this is the fixed daily rate that you need to pay the energy supplier regardless of whether or not there is an energy consumption. Remember that different energy suppliers can have different unit rates and standing charges. You have the power to choose commercial rates by comparing the prices of various energy suppliers. Switching energy suppliers can sometimes assist you to lower your energy costs.
Another key part of the business energy bill is the contract end date. This is important because when you are close to the end of the energy contract or the switching window, you can choose to renegotiate a new energy deal with your energy supplier or even more energy suppliers.
It’s always a good idea to remember the end date of your energy contract because forgetting to get a new energy deal can lead to your energy supplier giving you a more expensive tariff. This is a tariff that is not under the contract, so you can decide to switch energy suppliers anytime. A good energy broker can manage your energy contract to make sure that you get the best business energy deal.
Charges energy suppliers exclude on the business energy bill
There are many charges that you can see on the energy bill, there are also others that you will not. In most cases, these are usually the costs that can determine how much you will end up paying for your energy bill, so it may help you to know what they are.
One of the items is called losses which refers to energy losses that happen in electricity distribution. Because of the way power is generated, most of the energy that is produced in power plants doesn’t end up as usable energy for businesses.
Instead, a lot of this energy is lost as waste heat during the power generation process or even during distribution through the national grid. In some cases, the further the electricity needs to go from its source, the larger the losses can be. This means that you will have to pay more for the electricity.
The energy bill can have costs your energy suppliers pay to purchase electricity and gas from wholesale energy suppliers depending on the type of the contract. Business owners who are on fixed contracts can prevent price volatility over the rest of the period the contract runs.
But the price you may have to pay in your next energy contract period can reflect changes in wholesale prices. On the other hand, a pass-through contract can have the wholesale prices on your energy bills.
And, to make sure that your electricity doesn’t run out during your contract, an energy supplier can offer the energy that they expect you to utilize in advance before your contract starts. If your energy consumption tends to be lower than what you paid for, then you may be overpaying since the energy supplier will still charge you based on what they bought for you at the start of a fixed contract. This means that they are in a good position to cover any possible losses because they have excess energy they bought.
Keep in mind that the wholesale energy prices can vary significantly over time. Because energy suppliers utilize the inputs to produce electricity, it can affect the price you have to pay for your business energy bills. For example, if the cost of gas reduces, then the cost of energy generation lowers. On the other hand, if gas prices increase, the reverse is true.
There is also supplier profits or margins which is the price you have to pay, though many energy suppliers don’t indicate this. For example, an energy supplier can charge you a specific fixed charge, but there can also be a lower cost for maintaining their equipment and fixed plant that attract a certain fee.
The difference between the fixed charge and the true cost gives them a profit. Margins realized by energy suppliers can be quite low.
An energy broker like Utility Bidder can assist you get an energy contract that is best fit for your business. As payment for their services, energy brokers take a commission from the total cost of business energy that you utilize. In most cases, commission rates tend to vary depending on the broker.
There is also an industry charge that features in the bill breakdown. As explained earlier, energy suppliers may need to pay other companies in the energy industry for the usage of their services. Therefore, some of these charges can or cannot appear on your energy bill.
In conclusion, the energy bill can have various charges that energy suppliers can require you to pay. Some of the charges can appear on the energy bill while others don’t. Electricity bills are a key component of your business costs. Hence, it makes sense to understand these charges before you sign up for any energy supplier. Also, you should always remember to check the expiry date of your contract. And, review your energy bill regularly and lookout for cheaper energy deals elsewhere.
