Business Energy Glossary

The standard unit of measurement for energy. One kWh equals 1,000 watts of power used for one hour. Your energy bill is calculated based on how many kWh of electricity and gas you use, multiplied by the unit rate. A typical business uses between 5,000 and 50,000 kWh of electricity per year, depending on size and type.

A fixed daily cost you pay regardless of how much energy you use. It covers the cost of maintaining the energy network, supplying your premises, and broker administration. Standing charges typically range from 20p to 60p per day for electricity and 15p to 40p per day for gas. Even if you use zero energy, you'll still pay the standing charge.

The price you pay per kilowatt-hour (kWh) of energy used. This is the main variable in your energy bill. Unit rates are influenced by wholesale energy prices, your contract length, usage volume, and location. When comparing energy quotes, always look at the unit rate alongside the standing charge to calculate your true total cost.

Also called deemed or default rates. These are the rates you're charged when you don't have a valid energy contract in place — typically when your fixed-term contract expires without renewal or when you move into new premises without setting up a contract. OOC rates are the most expensive in the market, typically 30-50% higher than negotiated rates.

See Out-of-Contract Rates. The terms are often used interchangeably. 'Deemed' specifically refers to rates applied when you've never had a formal contract with a broker (e.g., just moved into new premises), while 'out-of-contract' refers to rates applied after a contract expires. Both are significantly more expensive than negotiated rates.

A contract where your unit rate and standing charge are locked in for the entire contract term (typically 1, 2, or 3 years). This provides price certainty and protects against wholesale price increases. If wholesale prices fall, you won't benefit — but most businesses prefer the predictability. This is the most common and recommended contract type.

A contract where your unit rate can go up or down during the term, typically linked to wholesale market prices. Some flexible contracts allow you to 'fix' your rate at any point. They offer potential savings if prices fall, but carry the risk of price increases. Generally recommended only for larger businesses with energy expertise.

The period before your contract end date when you can renew or switch brokers. Your broker must send renewal terms 120 days before your contract ends. From 49 days before, you can switch brokers without exit fees. Acting within this window is critical to avoid rolling onto expensive out-of-contract rates.

Penalties charged if you leave your energy contract early (before the end of the fixed term). Not all contracts have exit fees, and they're typically waived during the renewal window (49 days before end date). Exit fees usually range from £25-50 per fuel per year remaining on the contract.

A meter that records electricity usage every 30 minutes, providing granular data on consumption patterns. Half-hourly meters are mandatory for businesses with a maximum demand above 100kW. They enable more accurate billing and time-of-use tariffs, but require a different type of energy contract. We specialise in HH-metered sites.

A meter that automatically sends usage data to your broker, eliminating estimated bills. Smart meters for businesses provide real-time or near-real-time data on energy consumption, helping identify waste and optimise usage. Unlike half-hourly meters, smart meters are voluntary and available to businesses of all sizes.

The price brokers pay for electricity and gas on the wholesale market before adding network charges, levies, and their margin. Wholesale prices fluctuate daily based on supply and demand, geopolitics, weather, and fuel costs. When you sign a fixed-term contract, your broker locks in the wholesale price for the duration.

An environmental tax on business energy usage. Currently around 0.775p/kWh for electricity and 0.533p/kWh for gas (rates change annually each April). CCL is automatically added to your energy bill. Some energy-intensive businesses may qualify for reduced rates or exemptions through Climate Change Agreements (CCAs).

Businesses pay 20% VAT on energy (vs 5% for domestic customers). However, businesses with low usage (under 1,000 kWh electricity or 4,397 kWh gas per month) and certain non-profit organisations may qualify for the reduced 5% rate. We can advise if your business qualifies for reduced VAT.

A unique 21-digit reference number that identifies your electricity supply point. You'll need this when switching electricity brokers. It's usually found on your electricity bill. The equivalent for gas is called an MPRN (Meter Point Reference Number).

A unique reference number that identifies your gas supply point. You'll need this when switching gas brokers. It's usually found on your gas bill. The equivalent for electricity is called an MPAN.

A certificate that proves electricity has been generated from renewable sources. When a broker offers '100% renewable electricity', they match your consumption with REGO certificates. This means for every unit you use, an equivalent amount is generated from renewables (wind, solar, hydro) and fed into the grid.

An energy tariff where the broker matches some or all of your electricity consumption with renewable energy (via REGO certificates). Many brokers now offer 100% green electricity at the same price or cheaper than standard tariffs. Green gas (from biogas) is less common but increasingly available.

The cost of transporting electricity and gas through the National Grid and local distribution networks. These charges are included in your unit rate and standing charge, vary by region, and are regulated by Ofgem. Network charges typically account for 20-25% of your total energy bill.

The Office of Gas and Electricity Markets — the UK's energy regulator. Ofgem licenses energy brokers, sets rules for the market, protects consumer rights, and oversees the renewal window requirements. While business energy isn't price-capped like domestic energy, Ofgem still regulates broker behaviour and contract terms.

An independent body that resolves disputes between businesses and energy brokers. If you have a complaint that your broker hasn't resolved within 8 weeks, you can escalate it to the Energy Ombudsman for free. Their decisions are binding on the broker (but not on you — you can still take legal action if unsatisfied).

The highest level of electricity demand recorded at your premises, measured in kW. If your maximum demand exceeds 100kW, you're required to have a half-hourly meter. Maximum demand affects your energy contract type and pricing structure.

A pricing structure where the unit rate varies based on the time of day. Electricity is cheaper during off-peak hours (typically overnight) and more expensive during peak hours (typically 4-7pm). Time-of-use tariffs can benefit businesses that can shift consumption to off-peak hours.

An intermediary who compares energy brokers on behalf of businesses, negotiates rates, and manages the switching process. Brokers are paid by the broker you choose (not by you), so the service is free. Good brokers compare the entire market, are transparent about commissions, and provide ongoing account management.