The total amount a business pays for its energy supply over a 12-month period, including unit rates, standing charges, taxes, and any additional fees.
Energy terms explained for SMEs
The total amount a business pays for its energy supply over a 12-month period, including unit rates, standing charges, taxes, and any additional fees.
The term refers to when an energy supplier issues a retrospective bill for energy a business has used in the past but were not been previously charged for.
A contract renegotiation where businesses extend their current energy contract period in exchange for lower unit rates, effectively blending their existing higher rates with new lower market rates across the extended term.
Gas and electricity supplied to premises that are not used wholly or mainly for domestic purposes. This includes offices, shops, factories, warehouses, and other commercial or industrial premises.
A business energy quote contains information on how much it will cost to take a supply of electricity and/or gas for a business, including the prices and charges that would apply if a contract were agreed with that supplier
This term is used when someone moves into or out of a property and needs to update the energy supplier about the change in responsibility for the energy account. It ensures the correct person is billed for energy usage from the date they take over the property. You may also see this referred to as a Change of Occupier (CoO).
The costs a supplier incurs to purchase energy which are reasonably attributed to the supply of energy under a contract.
The date when a fixed-term period on a business energy contract expires and the fixed rates end. After this date, the contract typically continues on variable rates that can change (usually no more than every 6 months).
This occurs when a business agrees to a new, fixed-term energy deal with its current supplier, extending the existing arrangement. If a new deal is not actively agreed, the contract continues until the business changes suppliers, although the charges under the contract may change. To find out more information, click here.
Refers to the date on which an energy supplier agrees a contract with a business. This date is often earlier than the supply start date, as a supplier cannot apply to become registered for a supply until a contract has been agreed.
A "deadlock letter" is a final response from an energy company to a customer, stating that the company believes its position is different from the customer's and that there is nothing more it can do to resolve the complaint. Receiving this letter, or waiting eight weeks for a resolution, allows the customer to escalate their complaint to the Energy Ombudsman.
Deemed rates are the prices that apply to an energy supply when a business first moves into new premises and has not yet arranged a new contract. These rates may be higher than those available under a negotiated contract, reflecting the increased cost to serve such customers.
A formal instruction from a business to their bank allowing an energy supplier to automatically collect payment for bills.
Gas and/or electricity supply to a premises where the energy is used mainly or wholly for domestic use. This typically has different pricing structures, consumer protections, and regulatory requirements compared to business energy.
An eight-week letter is a notification from an energy supplier that they cannot resolve a customer's complaint within the required eight-week period, and that the customer can now take their complaint to the Energy Ombudsman.
Bills calculated using estimates of consumption rather than actual meter readings, based on historical usage patterns and seasonal adjustments.
A fixed-term contract is an arrangement under which a business agrees to take a supply from an energy supplier for a specified period, during which the supplier agrees to lock in prices. This provides stability and protection from energy wholesale market price increases over the contract period. However, the supplier usually reserves the right to adjust prices if non-commodity costs change.
A sustained increase in the general price level of goods and services in an economy over time, resulting in a decrease in the purchasing power of money, typically measured by the Consumer Price Index (CPI), Retail Price Index (RPI), or similar indicators.
Costs incurred by a supplier which are outside of their control and concern or relate to the supply of energy (other than commodity costs), and which are reasonably attributed to the supply of energy under your contract. These can include charges made for the transmission or distribution of energy and any taxes, levies or duties imposed on the supplier or in relation to the supply of energy.
Electricity pricing structures offering lower rates during periods of reduced demand, typically overnight and weekends.
Default rates automatically applied when a fixed-term period ends without arranging new terms or switching suppliers. These rates can change periodically (usually no more than every 6 months).
Third-party costs that suppliers must pay and pass directly to customers, including network charges, environmental levies, and taxes.
The way businesses pay their energy bills, with options including monthly direct debit, card payment or bank transfer.
The key contract terms that may significantly affect a business's evaluation of an energy contract. These must be provided before entering into a contract and typically include: unit rates, standing charges, contract length and end date, rights to terminate, broker commission (where applicable), and what happens when the fixed term ends.
Suppliers must present Principal Terms in plain and intelligible language.
This is a set daily fee you pay in addition to the unit rate, based on your meter(s) TCR band. It covers things like maintaining your meter, the pipes and cables that bring energy to your home, and keeping you connected to the network. It’s like paying line rental but for your energy supply.
The process of changing your energy supplier. This happens when you move from one supplier to another.
The pricing structure determining how much businesses pay for energy, which varies by by payment method, contract length, and consumption levels.
This is what you’re charged for each unit of gas/electricity supplied to a site. The rate can either be fixed or variable, depending on your contract with your energy supplier.
Tariffs where unit rates and standing charges can change at the supplier's discretion with notice.
Value Added Tax charged on business energy at 20% standard rate, though some may qualify for a 5% reduced rate. Charities, residential properties, and minimal-use businesses may qualify for reduced rates. To see the qualification criteria, click here.
The Annual Quantity (AQ) of a gas meter point is an estimate of the amount of gas that it will use in a year under seasonal normal weather conditions.
A measure of the amount of heat energy contained in gas, expressed in megajoules per cubic metre.
A calculation used to convert gas meter readings (in cubic metres or feet) into kilowatt hours for billing purposes.
An imperial measurement unit for gas volume shown as FT³, commonly used in older gas meters.
The metric measurement unit for gas volume used in modern meters, shown as m³ on bills. Most suppliers convert gas usage from cubic meters (m³) to kilowatt hours (kWh) using a formula. Click here for more information.
The total amount of gas and electricity used by a business over a specific period, measured in kilowatt hours (kWh).
Estimated Annual Consumption (EAC) is a figure that energy suppliers use to estimate a property's annual electricity usage, measured in kilowatt-hours (kWh). This estimate is updated when new meter readings become available to become more accurate over time.
An electricity meter that records consumption every 30 minutes, providing detailed usage data. These meters are typically installed at sites with high energy usage.
An older type of gas meter that displays readings in cubic feet (FT³). To calculate your gas usage in kilowatt hours (kWh) for billing. Click here for more information.
The standard unit for measuring electricity consumption, representing the energy used by a 1,000-watt appliance running for one hour.
kVA stands for kilovolt-ampere. It’s a unit used to measure the amount of electrical power a business can draw from the grid. It reflects the capacity of your electricity supply, not just what you use, and is important for making sure your equipment runs safely and efficiently.
A unit of energy equal to 1,000 kilowatt-hours, commonly used for measuring large-scale electricity consumption or generation.
A classification system that defines the technical capabilities and data collection methods of electricity and gas meters.
A unique 13-digit reference number identifying specific electricity supply points in Great Britain. This can be found on electricity bills and is essential for switching suppliers.
A unique 6-10 digit number identifying individual gas supply points across Britain's gas network. The MPRN remains constant regardless of meter or supplier changes and is essential for resolving supply issues or switching suppliers.
A measurement taken directly from gas or electricity meters to calculate energy consumption, with total usage since its installation.
The manufacturer's unique identifier physically displayed on each gas or electricity meter, used for asset tracking and verification. This number confirms the correct meter is being read and billed.
Modern gas meters displaying consumption in cubic metres rather than imperial units.
Non-half hourly meters generally require customers to submit manual readings to their supplier, or, if they are smart meters, automatically submit readings once a day, monthly or longer, depending on the settings.
A prepayment meter is a 'pay-as-you-go' energy meter where you pay for gas or electricty in advance by adding credit to it. You top up a key, card, app, or token with credit, and the energy supply is used from that credit until it runs out.
A smart meter is an energy meter that automatically records electricity or gas usage and securely sends the data to the energy supplier at regular intervals.
An independent energy consultant or intermediary who helps businesses compare energy suppliers and tariffs, negotiate contracts, and manage the switching process.
A market system backed by the UK government to ensure Britain has enough reliable electricity capacity to meet demand, particularly in peak periods like winter.
An environmental tax charged on the energy that businesses use, designed to encourage energy efficiency and reduce carbon emissions.
A government scheme to incentivise low-carbon, renewable energy generation, at the lowest cost to the consumers.
The UK government department responsible for energy policy, security of supply, and delivering net zero emissions by 2050.
Regional companies that own and operate the local electricity distribution networks, maintaining power lines and infrastructure that deliver electricity from the national transmission network to homes and businesses.
Charges paid by electricity suppliers to DNOs for using the local distribution network, which are passed on to business customers.
An independent alternative dispute resolution (ADR) scheme that investigates unresolved complaints between energy customers and suppliers. You can contact the Ombudsman after your supplier has issued a deadlock letter or if your complaint hasn't been resolved after eight weeks. The service is free for customers, and the Ombudsman's decision (if accepted by the customer) is binding on the supplier.
A carbon pricing system where businesses buy and trade allowances for their greenhouse gas emissions.
The physical infrastructure linking a business premises to the electricity and/or gas distribution networks, including meters, cables, and pipelines.
A limit set by Ofgem on the maximum amount suppliers can charge domestic customers per unit of energy. While this is discussed a lot online and TV, it is does not apply to commercial energy.
A legal document rating a building's energy efficiency on a scale from A (most efficient) to G (least efficient).
A company licensed by Ofgem to sell gas and electricity to end users (commercial and/or domestic).
Government or supplier support schemes designed to help businesses manage energy costs during difficult periods.
Self-imposed government constraints on public spending and borrowing that influence energy policy decisions and support schemes.
A publicly-owned clean energy company announced by the UK government to accelerate renewable energy development.
Environmental and social charges added to energy bills to fund renewable energy schemes and energy efficiency programmes.
Physical or technical limitations on how much electricity can flow through transmission and distribution networks at any time.
Large-scale battery energy storage systems connected to the electricity grid that store excess renewable generation for use during high demand.
A company with fewer than 10 employees (or their full-time equivalent) and an annual turnover or balance sheet total of £2 million or less; or with annual electricity consumption of 100,000 kWh or less; or annual gas consumption of 293,000 kWh or less.
The leading fuel poverty charity campaigning for warm, safe homes for everyone in the UK. This initiative focuses on domestic use and therefore, is not for businesses.
The company operating Britain's electricity transmission network, managing the high-voltage network connecting power stations to regional distribution networks across England, Wales, and Scotland.
A state where the volume of greenhouse gases produced is balanced by those that are removed from the atmosphere. The end goal is to negate the build-up of greenhouse gases. Currently, the UK target is to reach Net Zero by 2050.
A new government-backed charge planned to be introduced in December 2025 to help fund the next generation of nuclear power stations.
Ofgem is the independent regulator for gas and electricity markets in Great Britain, working to protect energy consumers. It sets and enforces rules for energy companies through licensing, ensuring fair pricing, responsible operations, and a clean, secure energy system.
Long-term contracts between renewable electricity generators and buyers agreeing fixed prices for power over 10-25 years.
A company with fewer than 50 employees and an annual turnover of £6.5 million or less (or a balance sheet total of £5 million or less); or with annual electricity consumption of 200,000 kWh or less; or annual gas consumption of 500,000 kWh or less.
A self-employed individual running their own business without a separate legal entity, personally responsible for all aspects.
Third party intermediaries (TPIs) are organisations or individuals that give energyrelated advice, aimed at helping you to buy energy and/or manage your energy needs. TPIs include switching sites, energy brokers and any company that offers support with energy procurement.
Charges for using the national electricity transmission network, varying by location and demand patterns.
An additional 25% tax on UK oil and gas company profits introduced in 2022, responding to high energy prices.
Annual government payments helping older people with heating costs in the home, worth £200-300 depending on circumstances. This does not apply to businesses.
The total amount of greenhouse gases (including carbon dioxide and methane) produced directly and indirectly by a business through its operations, measured in tonnes of CO2 equivalent.
A state where a business achieves net zero carbon dioxide emissions by balancing the amount of carbon released with an equivalent amount removed from the atmosphere through carbon offsetting, renewable energy use, or carbon capture technologies.
A service where businesses reduce or shift their electricity usage during peak demand periods in return for incentives or payments.
A supply arrangement where a business receives both gas and electricity from the same energy supplier, often with a single bill and point of contact. This sometimes offers discounted rates compared to using separate suppliers.
A systematic inspection and analysis of energy use within a business premises to identify opportunities for improving efficiency and reducing costs. This is typically carried out by a qualified energy assessor or specialist consultant.
The practice of reducing a business' energy consumption without impacting its performance of tasks or operations, aiming to minimise waste and reduce energy consumption.
An annual statement, required by law, showing the proportion of electricity generated from different sources such as coal, gas, nuclear, renewables by each supplier.
The primary energy source used to generate electricity or provide heating, including natural gas, coal, nuclear, wind, solar, hydro, and biomass.
Electricity generated from renewable sources such as wind, solar, hydro, and biomass that produce little to no carbon emissions.
Electrical devices that extract heat from air, ground, or water sources to provide efficient heating and hot water. While having high upfront costs, heat pumps can significantly reduce carbon emissions and running costs compared to gas boilers.
The use of hydrogen as a clean fuel alternative for heating, transport, and electricity generation. This is an emerging market; therefore, it is not widespread and not available to SMEs yet.
Devices which generate energy from renewable sources such as solar panels, wind turbines, and hydro and anaerobic digestion.
Certificates that guarantee where the portion of your renewable energy has been generated and sourced from.
Achieving no net release of carbon dioxide into the atmosphere from business operations, through eliminating emissions and offsetting remainder.
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