Decoding Energy Terms: An A-Z Guide for Business Energy

Written by Hayley Vice

Marketing Executive

Energy

19/06/2024

BLOG
Navigating through your business energy bills can often feel like deciphering a foreign language, filled with technical terms and industry-specific jargon.

For many business owners, understanding this complex lingo is crucial for making informed decisions about energy consumption and costs.

To help you demystify energy statements and make more educated choices, here at Valda Energy, we’ve put together an easy-to-understand guide.

Our A-Z Energy Glossary breaks down everything from kilowatt-hours to green energy, ensuring you have the knowledge you need to manage your energy usage efficiently and effectively.

A

Annual bill: The sum a customer would have to pay for electricity and/or gas over one year.

Annual Broker Commission: The yearly payment or fee given to an energy broker by an energy supplier for aiding the acquisition of a business customer.

Annual Fuel Mix Disclosure: A yearly report outlining the variety of electricity sources of generation used by an energy provider.

B

Blend and extend tariff: A type of contract that increases the length of your current contract whilst also bringing down the rates you pay.

Broker: A middle person/company who facilitates transactions between buyers and sellers, often for a commission.

Business Energy Quote: An estimate or proposal for the cost of supplying electricity and/or to a business customer.

Business Energy Supplier: A company that has been granted an appropriate Supply License by OFGEM to provide energy services to commercial and business customers.

Business Energy: The electricity and/or gas supply used by commercial enterprises to power their operations.

C

Calorific Value: a measurement of the amount of energy contained in gas. This is measured in megajoules per cubic meter (MJ/m cubed).

Carbon Footprint: The total amount of greenhouse gas emissions, including carbon dioxide and methane, produced directly or indirectly by an individual or business’s activities, indicating its environmental impact.

Carbon Neutral: A state in which a business’s overall carbon emissions are offset entirely by carbon reduction measures or by supporting carbon offset projects.

Change of Tenancy (CoT):  The process of moving into or out of a business premises where responsibility for the payment of the energy supply changes.

Combined Heat and Power (CHP): A system that simultaneously generates electricity and useful heat energy from a single fuel source, increasing energy efficiency. This is also known as cogeneration.

Climate Change Levy (CCL): An environmental tax on energy that businesses in the UK use, with the aim of reducing carbon emissions.

Contract End Date: The date when your current energy contract is due to expire, typically leading to a renegotiation or a switch to a new contract.

Contract Renewal: The process of extending or renegotiating your energy contract with your existing supplier.

Contract Start Date: The date an energy contract becomes effective and the agreed-upon terms and rates come into effect. Please be aware that the supply start date may differ from your contract start date.

Conversion Factor: A formula used to convert gas consumption from one unit of measurement.

Credit: The positive balance on your account, indicating that you have paid more than your current charges.

Cubic Feet: A unit of measurement for gas volume.

Cubic Meters: A unit of measurement for gas volume.

D

Deemed Rates: Usually occur if you have moved into premises that we already supply, but have not agreed upon a fixed term contract.

Department for Energy Security and Net Zero (DESNZ): The UK government department responsible for energy policy.

Direct Debit Mandate: An authorisation from a customer allowing an organisation to collect payments automatically from their bank account for bill payments. This is also known as a Direct Debit Instruction.

Distribution Network Operators (DNOs): Licensed companies responsible for owning and managing the infrastructure, including cables and towers, that bring electricity to our homes and businesses.

Dual Fuel: A type of energy tariff where you can get both your electricity and gas from the same supplier.

E

Estimated Annual Quantity (EAQ): Usually used to define how much gas is forecast to be used in a year for a particular property.

Energy Audit: An assessment that analyses a business’s energy usage and identifies areas where you can make energy efficiency improvements and save costs.

Energy Broker: A third-party intermediary that helps businesses compare and negotiate energy supply contracts with different utility providers.

Energy Consumption: The total amount of energy used by a customer over a specific period. Businesses will be offered energy rates according to their premises’ estimated annual energy consumption.

Energy Efficiency: The practice of reducing a business' energy consumption without impacting its performance of tasks or operations, aiming to minimise waste and reduce energy consumption.

Estimated Billing: Billing based on your estimated energy consumption when actual meter reads are not available.

F

Fixed Commission: A prearranged rate paid to an energy broker for their services. The amount is often specified in a contract.

Fixed Term Contracts: An agreement between a customer and an energy supplier where the price you pay for your energy is fixed throughout your contract.

Fuel type: The specific type of energy source used to generate electricity or gas, such as coal, wind, natural gas, nuclear, solar power and more.

G

Green Energy:  A vague term for energy generated from renewable sources, with a lower environmental impact than fossil fuels. This includes wind, solar and more.

H

Half Hourly Meter: A type of business electricity meter that records consumption data every half hour.

I

Imperial Gas Meter: A type of meter used to measure gas consumption usually measured in hundreds of cubic feet (hcf). This will be displayed as a four-digit read after the decimal point.

Intermediary: An organisation that can help people switch energy tariffs. Another term for this is broker.

K

kWh (Kilowatt-hour): A unit for measuring your electricity consumption. One kWh is equivalent to a power consumption of one thousand watts for one hour.

M

Meter Class: A group or groups of electricity and gas meters assigned to by specified features and capabilities.

Meter Read: A record of the actual consumption registered on an energy meter.

Metric Gas Meters: A type of meter used to measure gas consumption in cubic meters m^3. This is displayed as a five or six-digit read.

Micro Business: A business that has fewer than 10 employees and turns over less than £1.8 million OR has more than 10 employees but it uses less than 100,000 kWh of electricity a year and less than 293,000 kWh of gas a year.

Meter Point Administration Number (MPAN): A unique reference number used to identify an individual electricity supply point.

Meter Point Reference Number (MPRN): A unique reference number used to identify an individual a gas supply point.

Megawatt-hour (MWh): A larger unit for measuring electricity consumption. One MWh is equal to 1,000 kWh.

N

Non-half Hourly meter: A meter that provides measurements for settlement purposes on a basis other than half-hourly. This is normally monthly or longer.

O

Off-peak Tariff: A tariff for where lower rates are charged during times when demand is typically lower, such as overnight or weekends.

Ofgem: The Office of Gas and Electricity Markets is a UK government regulator for the electricity and gas markets.

Out-of-contract tariff: A tariff a customer is placed on when their contract expires or if they’ve not entered a new contract. This usually comes with higher rates than other tariffs.

P

Power Purchase Agreements (PPA): Contracts between energy producers and suppliers specifying terms for the purchase of electricity or other energy products. It is commonplace for renewable generators exporting surplus energy.

Power Usage: The amount of electrical power used by a person or an organisation. This is often measured in kilowatts (kW) or megawatts (MW).

Payment Method: A way where customers pay for energy. At Valda Energy, this is via Direct Debit or bank card.

Principal Terms & Conditions: The key terms and conditions within an energy contract. This is not a substitute for the full Terms and Conditions.

R

REGO (Renewable Energy Guarantees of Origin): Certificates that guarantee where the portion of your renewable energy has been generated and sourced from.

Renewable Energy Certificates (RECs): Tradable certificates that represent proof of renewable energy generation. Businesses can purchase RECs to support green energy initiatives.

Renewable Energy: Sustainable energy sources which are considered friendly to the environment, such as solar, wind, hydro, or geothermal.

S

Small business: Often defined as a business with less than 50 employees and an annual turnover under €10 million. In energy terms, a small business has an annual spend of up to £30,000 on gas or electricity.

Smart Meter: A metering device that records energy consumption in real-time and sends your reads to your current energy supplier digitally. This means that your supplier always has access to the most up-to-date data, and you can always see what you have spent.

SMETS: SMETS stands for ‘Smart Metering Equipment Technical Specifications'. The number afterwards shows which “generation” the meter belongs to. The latest versions of these meters are known as SMETS2.

Sole Trader: A type of business that is operated and owned by one person.

Standing Charge: A daily fixed amount that covers the basic costs of supplying energy, no matter how much or little you use. Almost all suppliers include a standing charge on their tariffs and will be stated on your energy contract.

Supplier: Licensed by Ofgem to supply gas and/or electricity to homes and businesses.

Switching: The process of moving to a different energy supplier or tariff to receive better rates or services.

T

Tariff: The rate or pricing plan that determines how much you pay for your electricity and/or gas usage.

U

Unit Rate: The charge you pay for each unit of gas/electricity supplied to a site.

V

Variable: A tariff that the supplier can amend the standing charge/unit rate(s) at its discretion.

Z

Zero Carbon Emissions: A state where carbon dioxide (CO2) emissions produced are balanced out by carbon offsetting or renewable energy use.

We hope you now feel more confident in navigating the various energy terms that sometimes come along with owning your own business. If you are looking to understand energy terms used in both domestic and business energy, visit the Ofgem website for more information.

For further assistance in understanding your energy bills, don't hesitate to explore our free guide available on our support page.