3 Tips on Decrypting the Standard Business Energy Bill
A typical business energy bill can be a minefield of jargon and unclear terms and conditions. With Government legislations such as ESOS and P272 being enforced in recent months, it is more important than ever to get to grips with your business energy bills. However, by understanding your business energy billing and when your contracts are managed correctly, you can unlock savings within your business.
Recent energy legislation such as MOD 0428 and P272 will have a significant impact on the way in which energy suppliers present your bill and, more importantly, the way that they charge for the energy. It's likely that your business energy bills will look very different in the near future. It's highly possible that energy supplier invoices will no longer just consist of consumption information but may include additional charges such as capacity and other non-energy costs, e.g. government levies and national grid charges.
With the introduction of ESOS, companies are being asked to take a more careful view of carbon management, with emphasis on carbon moderation and the possible introduction of renewable generation and staff/ director education to gain more of an understanding of the business' carbon strategy.
Ultimately, there are a number of questions that you should be asking in order to become more familiar with your energy usage and subsequent billing:
Do you monitor your own capacity and manage it accordingly?
With the introduction of P272 much more emphasis will be put on the amount of energy you use within the business. Monitoring your capacity is important because, if you exceed agreed capacity limits, you may be charged for the excess at a higher rate. If you find that you are regularly going over your agreed capacity we recommend that you renegotiate your package to account for this. Likewise, if you are under using against your agreed capacity you can arrange to get a reduction on your monthly bill. This would however need to be reviewed very carefully.
Do you know who your distributor is and have you arranged a MOP agreement with them?
The P272 legislation has driven the need for people to be aware of who their distributor is, their CT ratio, what their agreed capacity is, and source a meter operator agreement (MOP). This will lead to yet another set of charges that you may not have come across before. As an example this could be further settlement charges and DC/DA costs to cover the collection and management of Half Hourly (HH) Electricity data.
Have you read your terms and conditions and do you understand the implications?
It is very important to have a full understanding of all of the clauses within your terms and conditions. It would be a shame to overlook something that could cause problems for your business' energy supply in the future. The unit cost is just one component factor in choosing a supplier, be careful not to overlook the plethora of other costs that may or may not be presented to you. The headline unit rate may be less attractive when applied to the contract Terms and Conditions. We also urge our clients to ensure that they understand whether they have been forecast fully or whether a pass through element may be imposed.
In today's business energy market we are steering away from a standard pence per unit charging system and are leaning towards a cost breakdown with a need to understand the different elements, what they mean and how we can reduce these costs. The more you know, the more you can be prepared in case you do receive an invoice with unexpected charges on.
Procuright recognises that businesses don't always have the resources to go through energy bills with a fine toothcomb on a regular basis. Our team of business energy specialists can help you to navigate the market, assist with forecasting and take charge of managing your business energy bills. Through our partners we have excellent relationships with a wide range of business energy suppliers and will support you in understanding the different ways that the various suppliers behave. This includes an in depth understanding of suppliers' terms and conditions where we can swiftly ascertain if you have committed yourself to anything that will put you at risk. We work hard to stay on top of the latest Government legislations and fully understand how these will impact the energy markets and our clients.
Energy represents a significant spend for many businesses and making sure that you understand your monthly business energy statement is vital. Ensuring you're on the best plan for your business and getting good value for money from your procurement decisions is where Procuright comes in.
And finally, you should always keep in mind that new Government legislation will affect different businesses in different ways. To find out how this will affect your business, please get in touch with us today.
"Energy represents a significant spend for many businesses and making sure that you understand your monthly business energy statement is vital. Ensuring you're on the best plan for your business and getting good value for money from your procurement decisions is where Procuright comes in."