Energy bills are often one of the largest overheads businesses face, so understanding how a bill is made up and what it’s saying can help you stay in control of managing cost.

We get a lot of questions around energy bills, so to remove some of the confusion we’ve developed this blog to breakdown of the key sections and what they mean, to make the process a bit easier.

Account details and billing period

Your bill will likely consist of several pages and should always contain the supply address, your account number and your Meter Point Administration Number (MPAN), sometimes referred to as supply number. Each bill should also include the billing period (the dates the bill covers).

Meter readings and usage

Energy bills often include a previous or latest meter reading. This information is used to calculate how much energy you’ve used.

Alongside the energy value, you may also see the reading type listed as:

• A or Actual (taken from your meter)
• C or Customer (submitted by you)
• E or Estimated (calculated by the supplier)

Estimated readings can sometimes cause bills to be higher or lower than expected as it's based on your annual usage, so it’s a good idea to submit regular readings. It is also important to understand that meter readings may need to be provided within a specific window to be considered in time for the next energy bill.

Unit rate (Price per kWh)

Unit rates make up around 35% of your energy cost and can be quickly influenced by weather or the geopolitical landscape. On the energy bill, energy usage is measured in kilowatt hours (kWh). Your bill will show a unit rate, which is the cost of each kWh you use. For example, if your unit rate is 25p per kWh and you use 100 kWh, your usage cost would be £25.

If you have different energy requirements throughout the year, it’s important you submit regular meter readings to keep your bills accurate, as the annual figure won't be a good reflection of what you actually use outside of the peak season.

Standing charge

Standing charges have increased in recent years and now make up a bigger part of your bills than ever before at around 65%. Most tariffs include a standing charge, which is a fixed daily amount.  Some contracts offer reduced or zero standing charge options, though these may come with adjusted unit rates. This charge contributes towards maintaining the energy network, meter infrastructure and administrative costs.

VAT, CCL and total amount

Business energy is typically charged at 20% VAT, although reduced rates may apply under the de minimis rule, where there are mixed business and domestic use. Charities and certain non-for-profit organisations may also qualify for reduced VAT and Climate Change Levy (CCL).

Additional line items

As the energy market evolves, new industry charges can appear on bills. Some contracts allow suppliers to introduce certain “pass-through charges” if they are mandated by government or regulatory changes. A recent example is the Nuclear Regulated Asset Base (RAB) charge, which was introduced following government legislation. It is important to review these items, so you understand how your contract operates.

Payments and balance

Finally, your bill will show the total amount due from adding up the charges we’ve already outlined, and your current balance including any payments already made. This helps you see if you owe money, are in credit, or have a direct debit amount set up.

Understanding your bill helps you stay in control of your energy use and costs.  If anything doesn’t look right, such as unusually high usage or estimated readings, get in touch with the NFU Energy Team on 0247 669 8885 and we’ll be happy to help.

Watch the webinar

Want to learn more about your energy bill, how it’s made up and some of the newer pass-through charges that are starting to appear? Watch our webinar here.