Why Has My Business Electricity Bill Gone Up?

A business electricity bill usually goes up for one of a handful of reasons: your fixed contract has ended and you have rolled onto more expensive rates, your usage has genuinely risen, or the charges built into your unit price have increased. The first job is to work out which one applies to you, and your bill holds most of the answer. Below are the common causes and how to tell them apart.

Your contract has ended

This is the most common reason for a sudden jump. When a fixed term contract ends and you have not agreed a new one, suppliers move you onto out-of-contract or deemed rates. These are typically much higher than the rates you were paying, because they are designed for customers who have not committed to a new deal.

Check your contract end date, which should be on a recent bill or your original paperwork. If the rise lines up with that date, this is almost certainly the cause. Business energy contracts are not covered by the domestic price cap, so there is no capped tariff to fall back on; if you take no action, you simply move to more expensive deemed or out-of-contract rates. It is worth agreeing a new deal before the term ends. Business energy contracts also generally do not include the statutory 14-day cooling-off period that applies to domestic customers, so read any renewal carefully before you sign.

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Estimated readings instead of actual usage

If your meter is not read regularly, your supplier estimates how much you have used. An estimate that was too low for a while may be adjusted by a subsequent actual reading, resulting in a catch-up bill that reflects previously uncharged usage rather than a genuine spike.

Verify whether there is an 'E' next to the meter reading on your bill, which usually means estimated, or an 'A' for an actual reading. If recent bills have been estimated, submit a current reading and ask the supplier to reissue. A smart meter avoids this, since readings are sent automatically.

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Standing charges and non-commodity costs

Your bill is not just the electricity itself. A few other elements can push the total up even when your usage has not changed.

• Standing charge: a daily fixed charge you pay regardless of how much you use. If this rises, your bill rises even in a quiet month.
• Network charges: the cost of using the cables and infrastructure that deliver power to your premises. These are set by regulated bodies and passed through to you.
• Policy costs: charges that fund government energy and environmental schemes.
• Capacity charges: demand-related costs that some businesses incur, most often larger users, depending on how their site and contract are set up.

These are sometimes grouped together as non-commodity costs. They change over time, and suppliers update them at set points. On many business bills they are bundled into the unit rate rather than listed separately, so a rise here can be hard to spot without comparing line by line against an older bill.

Most businesses pay VAT on electricity at the standard rate, though some low usage or charity customers may qualify for the reduced rate. The Climate Change Levy is a separate tax on business energy use, charged per unit. Both appear on your bill. If your eligibility for a reduced rate or an exemption has changed, your total can move. Current VAT and Climate Change Levy rates are published on GOV.UK.

The increase might also be due to higher actual consumption. New equipment, longer opening hours, extra staff, heating or cooling in extreme weather, or a faulty appliance left running can all raise usage. Compare your consumption in kWh against the same period last year rather than the previous month, since most businesses use different amounts across the seasons.

How to check, and when to query it

Work through your bill in this order:

• Find your unit rate and standing charge, then compare them with an older bill to see whether the price has changed.
• Check whether the readings are actual or estimated.
• Check the usage in kWh against the same period a year earlier.
• Confirm your contract end date and whether you are on out-of-contract rates.

If the rise is explained by a known price change, a contract ending, or higher genuine usage, the bill is likely correct even if unwelcome. Query it with your supplier if the figures do not add up: estimated readings that look far too high, a charge you cannot identify, or a total that does not match your contracted rates. Raise it with the supplier first and keep a record. If you are a microbusiness and the complaint is not resolved after eight weeks, or you receive a deadlock letter, you can take it to the Energy Ombudsman; this route is available to microbusinesses rather than all business customers. Citizens Advice and Ofgem also publish guidance for business customers, and arrangements can differ in Scotland and Wales.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Business Standing Charge Calculator lets you work out how much your business pays in daily standing charges over a year, for electricity, gas or both, even when a unit is empty. Try it now →