Five errors we find most often on business energy bills

1. Rates that do not match the contract

The unit rates and standing charges on the bill should match the contract you signed. Problems often start at a change: a renewal that was never applied, a new meter added at higher rates, or a site left on out of contract rates after its contract ended.

2. Estimated reads

Bills built on estimates drift away from what you actually use, then correct with a large catch-up bill. For microbusinesses, Ofgem rules introduced in 2018 generally stop suppliers billing for energy used more than twelve months ago where the customer was not at fault, but it is far better to keep bills accurate in the first place. Regular meter reads, or half-hourly data, fix most of this.

3. Wrong VAT or Climate Change Levy

• VAT. Business energy is normally charged at 20%. The reduced 5% rate applies where use is small, up to an average of 33 kWh a day of electricity or 145 kWh a day of gas, or where at least 60% of the supply is for a qualifying use such as residential or charitable non-business use.
• Climate Change Levy. Supplies within those small-use limits are not charged the levy, and some businesses hold agreements that reduce it. Check it is being charged, or not charged, correctly.

Where VAT has been overcharged, it can usually be reclaimed for up to four years.

4. Capacity charges on larger sites

Half-hourly sites have an agreed supply capacity. Set it too high and you pay every month for capacity you never use. Set it too low and you pay excess capacity charges whenever demand goes over. Comparing the agreed capacity with your actual peak demand shows which applies.

5. Reliefs that are not applied

Reliefs and exemptions only help if they reach the bill. Eligible manufacturers should check schemes such as BICS are applied once they qualify, and any site with a climate change agreement should check its reduced levy is showing.

How to check your own bills

Line up a year of invoices against your contract, check meter reads are actual rather than estimated, and look at the VAT, levy and capacity lines. If you would rather we did it, send a bill for a free contract health check and we will tell you plainly whether anything looks wrong. Our view is based on the information you send, so it is always worth confirming against your full contract.

Common questions

Sources

• Ofgem: Protecting consumers who receive backbills, statutory consultation
• GOV.UK: VAT on fuel and power (VAT Notice 701/19)

Contains public sector information licensed under the Open Government Licence v3.0.

This page is general information, not advice on your specific circumstances. Contract terms, charges and scheme rules change, so it is worth confirming the detail for your sites before making a decision.