In this blog post, we’ll help you to understand how prices are calculated, as well as the different charges included on your bill. This should help you to compare business energy with greater ease.
Business electricity prices are predominantly calculated using a standing charge and unit (kWh) cost. The standing charge is the amount of money you pay to the company supplying your energy for giving you access to energy. The unit rate is the price you pay per unit, and kWh is the unit used to measure electricity, i.e. kilowatt hours of energy. The unit rate can fluctuate depending on how much energy you use. Because of this, it is impossible to provide you with an accurate quote without an assessment of your business. Both unit costs and standing charges are calculated on a business-by-business case.
There are a number of other costs you need to consider when doing a business electricity price comparison. This includes:
Supplier margins: of course, electricity businesses want to make a profit, just like you do. Supplier margins don’t only generate profit, but they cover administration, acquisition and marketing costs.
VAT: VAT is typically charged at 20%, however, you may be eligible for a reduced rate of 5%.
Metering costs: Meters may appear simple, but they are advanced pieces of kit. They need to be paid for.
Climate Change Levy (CCL): In 2001, the government introduced the CCL, which is a tax to encourage numerous sectors to cut their greenhouse gas emissions and boost energy efficiency.
Distribution use of system (DUoS) charges: Distribution Network Operators (DNO) apply these costs. They can be applied for numerous reasons, including the maximum supply requirements of sites that make up the network and day and night charges.
Transmission use of system (TNUoS) charges: The cost of distributing and transporting energy will be included in your electricity bill.
When you take this into account, it’s not hard to see why prices differ so dramatically, and why it’s so important to compare quotes to find the best deal.