Breaking down your business energy bill: What are you really paying for?

Complex and nuanced data and charging structures surround the final figure on your energy bill – influenced by your portfolio, location and energy use. 

This is why commercial premises can pay very different sums for their energy. For example, a restaurant in London and a hotel in Liverpool could pay vastly different rates despite their initial similarities due to their differing operating times and types of energy use.  

Resultingly, the ways you can reduce your energy costs will also be unique. Working with an expert energy partner allows you to make informed decisions about what measures are available to you – let’s look at some of them. 

What makes up your business energy bill?

Your energy bill is made up of two elements:   

• The commodity cost. This is the wholesale cost of the electricity and gas you use – set by market conditions on the day they are bought.  
• Non-commodity costs, also known as third party or non-energy costs. Examples of non-commodity costs include Transmission Network Use of System (TNUoS) charges, Distribution Use of System (DUoS) charges and Climate Change Levy (CCL). 

The power of procurement

Energy is one of the most volatile commodity markets in the world. Events on the other side of the world – such as the weather, geopolitical matters and supply chain issues – can have an instantaneous impact on electricity and gas prices here in the UK.  

Furthermore, businesses have separate contracts for gas and electricity – even if both come from the same supplier. How and when you buy matters. 

Therefore, expert support to negotiate your next contract is key. Your energy partner should have the resources, capacity and expertise to place you on a better-informed footing when making energy decisions for your organisation. 

Do you use a bill validation service?

Your daily business leads to a steady stream of utility bills – often from different suppliers. These bills can contain errors for many reasons, including incorrect meter readings, faulty equipment and changes in usage patterns.  

Organisations do not always have the internal resources, industry experience or software to interrogate these invoices effectively. 

Therefore, delegating your invoice administration to an expert partner frees up your internal resource for other business priorities.   

Inspired offers a rigorous bill validation service, where we scrutinise your invoices for any errors, compare them to ensure your costs reflect your consumption and pursue any refunds on your behalf.  

What can I do about my non-commodity costs?

Non-commodity costs can currently make up around 60% of business energy bills – no wonder these are gaining the spotlight in media and industry conversations.   

The impact of non-commodity costs depends not only on your consumption, but moreover on the configuration and regulation surrounding your portfolio.   

The charging structures around these costs are made up of complex industry information — how can you make sure you have been charged correctly? 

While bill validation checks your billing against contracted rates, Inspired’s Forensic Energy Cost Audit scrutinises your past and present billing to ensure non-commodity rates have been applied correctly and pinpoint all cost recovery opportunities and ongoing savings.