What is an Energy Bill? How To Choose a Suitable Supplier?

What is an Energy Bill

Looking at an energy bill will tell you how much money you owe for the electricity and gas your business uses. However, the bill can be confusing for many individuals due to the many different charges listed. Understanding your energy bill is important to avoid paying too much.

This guide will explain energy bills in a simpler way so that you can easily learn what the charges mean and how to read your bill correctly. With this knowledge, you can find ways to save money each month on your energy usage.

What is an Energy Bill?

Energy bill is the paper that shows the amount of money a business needs to pay each month for electricity and natural gas. This amount is calculated based on how much energy your business consumes, which is measured by meters. The more energy you use, the more amount you will pay.

Energy Bill

The energy bill includes the cost of electricity and gas usage. It also has additional charges like flat fees, taxes, and other costs added by the utility company.

Understanding all the details on your energy bill is important for managing your utility costs. Looking closely at the bill can also help you find ways to save money. You may be able to use energy more efficiently at your business. Or you could try negotiating a better rate with your energy supplier.

Knowing the elements that contribute to the total energy costs will help you use energy smarter and lower your energy bills.

What is Negative Energy Bill?

Customers sometimes find their electric bill shows a negative balance rather than an amount owed to the utility company. This negative balance indicates that the customer has a credit on their account, not outstanding charges. There are two reasons for this situation.

  1. The first is if the customer has overpaid on previous electric bills. Perhaps they overestimated future usage when making payments, or the utility had them enrolled in a higher billing plan than required. Whatever the reason for the overpayment, the excess funds paid are rolled over as a credit balance on the account.
  2. The second case is net metering. Some customers have rooftop solar panels that might generate more electricity than consumption. The surplus energy is fed back into the utility’s grid, and the customer receives a credit on their bill for the excess energy.

However, take note that a negative balance does not mean the utility company will issue a payment to the customer. However, the credit balance will offset charges on future bills. For a large credit, customers can contact their utility provider and request an actual refund per the company’s policies.

How to Read Electricity and Gas Bills? – Energy Bills Explained

Your energy bill shows the pricing plan for the amount of money you are spending on your electricity and gas usage. It breaks down all the costs for the energy areas you are paying for.

Knowing how to read and understand your energy bill will help you choose the best pricing plan for your needs. You can also check if the charge amount matches the energy you used. If there are any mistakes, you know you could be paying too much or too little.

Introduction Page

  • Billing Address: This is where the bills are mailed. It could be different than the property receiving the utility service.
  • Current Balance: Shows if you owe money (negative number) or have a credit (positive number). The amount here is typically what you need to pay.
  • Supply Address: The address of the property that is receiving the gas/electricity service.
  • Statement Number: A unique number to identify this particular bill is helpful if you need to discuss it with customer service.
  • Statement Date: The date this bill was issued.
  • Tariff: The name of your current pricing plan for gas/electricity.
  • VAT Charges: The amount of tax applied.
  • Annual Estimates: A projection of your total costs for gas and electricity over the next 12 months based on usage. Useful for comparing if you want to switch providers.

Detailed Information Page

This page breaks down your charges for gas and electricity based on how many units you used during the billing period. Electricity is measured in kWh, while gas measurements are converted to kWh for convenience. You’ll see the unit rate and standing charge listed before VAT is added.

  • Meter Information: MPAN is the long number identifying your electricity meter, while MPRN is the number identifying your gas meter.
  • Meter Readings: If you submit readings, they will be listed here. If not, estimated readings based on your annual usage will be used. Meanwhile, if blank, a meter reader visited and provided the reading.
  • Cost of Electricity Details: It shows how much electricity you used during this period and breaks down the different charges for that usage.
  • Cost of Electricity Supplied: The total charge for your electricity usage, including VAT.
  • Gas Conversion: Since gas isn’t measured in kWh, this section shows how your gas usage was converted to kWh for billing.

How to Calculate Your Energy Bill?

Your monthly business energy bill amount doesn’t just depend on how much energy your business uses that month. There are several other factors that go into determining the total bill amount:

Standing Charge

The standing charge is a fixed daily fee you pay regardless of how much energy you use. It covers the basic costs of being connected to the energy grid.

To calculate the standing charge, multiply the daily rate by the number of days in that billing cycle. For example, if your standing charge rate is 42 pence per day and the billing period is 30 days, the standing charge for that month’s bill will be 42p per day x 30 days = £13.95.

So even if you used zero energy that month, you would still owe £13.95. The more days in the billing cycle, the higher the standing charge portion of your total bill will be.

This flat daily fee gets added on top of the charges for whatever energy you consumed over that billing period. It ensures the energy company recoups some of its base operating costs.

Unit Rate

The unit rate is the price for each unit of electricity (kilowatt-hour or kWh) or gas (therm). In a fixed-rate plan, this unit rate charge is an agreed-upon price for the contract term. It will protect you from energy price hikes. Meanwhile, a variable rate plan will fluctuate monthly based on market prices.

The more units you consume, the higher your bill – even with a fixed unit rate. So while a locked rate provides consistency, monitoring your usage levels is still key to managing energy costs.

Several factors contribute to your unit rates and standing charge:

  • Wholesale costs are the amounts energy suppliers have to pay to purchase the energy. When these wholesale market prices increase, suppliers pass those increased costs onto customers.
  • The Transmission Network Use of System (TNUoS) charges cover the costs of building, operating, and maintaining high-voltage transmission lines and infrastructure.
  • The Distribution Use of System (DUoS) charges are collected by the local Distribution Network Operator (DNO) to operate the regional power lines.
  • Balancing Service Use of System (BSUoS): These charges represent the costs incurred by the National Grid for maintaining the balance of demand and quality and security of supply on the network. Suppliers and generators pay these daily charges based on their energy taken from or supplied to the National Grid.
  • Capacity Market (CM): This scheme secures additional winter capacity from generators and demand-side response providers, who receive stable payments in return for a commitment to deliver energy when required. Electricity consumers pay for these subsidies through their consumption during the winter period.
  • VAT: Value-added tax is added to your business energy bill by your supplier. However, you could reduce the rate up to 5% if your daily consumption is below certain thresholds.
  • Renewable obligations: These charges funded large-scale renewable electricity generation.
  • Feed-in Tariff (FiT) and Contracts for Difference (CfD): These schemes encourage on-site energy use through solar panels or wind turbines.
  • Line Losses: This charge accounts for the electricity lost during transmission and distribution across the electric grid. Suppliers must purchase sufficient energy to cover projected consumption, including line losses, and pass this cost on to customers.

How to Pay Your Business Energy Bill?

The payment method can affect both the total amount you pay and the time it takes to manage your payments. Several options are available:

  • Direct Debit – This method automatically deducts a fixed amount from your bank account each month. It is convenient and some suppliers offer discounts for it. However, you may end up overpaying or underpaying if your usage changes, leading to a potential lump sum payment later.
  • BACS Transfer – With this electronic payment, you can change the amount you pay each month based on your actual bill.
  • Debit or Credit Card – You can call your energy supplier to make the payment through a debit or credit card.
  • Cheque – At the bottom of your bill, you can find a slip for paying by mailing a cheque or postal order to your supplier.

Choose The Most Optimized Electricity Supplier with Light Up Energy

At Light Up Energy, we take a different approach by building long-term relationships with our clients instead of the typical transactional energy contract renewals. Our account management and customer support come at no extra charge. We review your past bills to check for discrepancies like overcharges or incorrect pricing plans. We also handle installing smart meters so you don’t have to worry about readings or estimated bills, even helping with readings before your supply with us starts.

Our experts thoroughly understand complex regulations like ESOS and CCA, ensuring your business remains fully compliant. You’ll get our dedicated support right away after signing up, even if your new energy supply is still months or years away. It is quick and easy to reach out to our customer support team with any energy inquiries.

By prioritizing long-term partnerships, Light Up Energy provides value-added billing analysis, metering assistance, regulatory guidance, and readily available support. We aim to make the process of choosing an optimized electricity supplier a seamless experience.

FAQs About Energy Bills

This briefing explains and addresses common questions people often have about energy bills.

What Does Credit Mean On Energy Bill?

Your account is in credit usually means you paid more money than the amount due on your bill during the billing period. Or, you received a larger refund or credit than your current bill amount.

What Does DR Mean On Energy Bill?

If your energy bill shows “In Debit (DB)”, it means you owe money to the energy company. This happens when you use more energy than you have already paid for.

What Does Minus (-) Mean On Energy Bill?

A negative or minus balance on your energy bill means you still need to pay that amount to the energy company. You must pay this amount along with the charges on your next bill.

What Does A Plus (+) Mean On Energy Bill?

A plus (+) or positive balance means you have an existing credit on your energy account, likely from overpaying or making extra payments in previous billing cycles. This credit will apply to future charges.

What Does Above Zero Mean On Energy Bill?

If the balance on the energy bill shows an amount above zero, it means you have a positive balance or credit remaining after all charges are applied.

What Does Below Zero Mean On An Energy Bill?

A balance amount below zero indicates you currently owe money to your energy supplier. The negative value shows the outstanding balance you need to pay in addition to any new charges on your next billing cycle.

What Does Balance Mean On Energy Bill?

The balance on your energy bill is the total amount you owe or have extra with the energy company after calculating all charges and payments.

What Does Capping Energy Bills Mean?

Capping energy bills refers to setting maximum limits on how much energy suppliers can charge per unit of energy consumed. This helps protect consumers from exceptionally high costs.

What Does Standing Charge Mean On Energy Bills?

The standing charge is a fixed fee the energy company charges for the energy service, regardless of how much energy you actually use.

What Does Energy Charge in Electricity Bill?

Energy charges cover the actual amount of electricity or gas you use over a billing period. It is measured in kilowatt-hours (kWh) and is calculated by multiplying your usage by the per-unit cost.

What Does Price Cap On Energy Bills Mean?

A price cap limits the maximum amount per kWh that energy companies can charge households on their standard energy plans, preventing extremely high rates. However, your usage charges can still change within those capped rate levels.

What’s The Average Annual Bill Spend For Electricity In The UK?

  • For low usage in a small flat or 1-bedroom house, the average annual electricity bill is around £660.
  • For medium usage in a typical 3-bedroom house with 2-3 people, the average electricity cost per year is approximately £930.
  • Larger households, like a 5-bedroom house with 4-5 people, come with higher usage. • It can be expected that their average annual electricity bill will be around £1,273.

What Types of Energy Do Businesses’ Buildings and Industrial Processes Use?

For buildings in the UK, space heating accounts for nearly half (49%) of energy usage, making it the largest consumer. Lighting and cooling/humidification are the next biggest at 11% each.

In industrial processes, the majority (59%) of energy goes toward heat-related operations like high/low-temperature processes and drying. Electricity powers motors, compressed air systems, and refrigeration since it’s the only suitable fuel source for those applications.

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Light Up Energy
Light Up Energy
Light Up Energy, founded by hospitality experts with 20+ years of experience, helps businesses save money via innovative energy management strategies.

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