Understanding your business gas bill
Business gas is used for everything from keeping your shop or workplace warm, to powering ovens and vital equipment. Costs can quickly add up if you don’t keep on top of your contract, especially if you’re on an uncompetitive rate or you’ve let your contract run down without arranging a new one.
Check your latest bill to see how much you’re paying and what exactly you’re paying for.
What costs should you look out for on your business gas energy bill?
A quick look at your most recent business gas bill will likely leave you a little confused. There’s a range of different information, from your meter point reference number to your total energy charge. Of course, the final price will be the part of your bill you’re most drawn towards, but it’s not actually the most useful piece of information for understanding your gas bill.
Instead, you should look at your unit cost and standing charge. These are the individual costs which make up the bulk of your gas bill payment.
First, you’ll have to pay a daily charge for the privilege of being supplied gas to your business location. This is called the ‘standing charge’.
Then, you’ll have to pay for every kilowatt-hour (kWh) of gas your business consumes. This is the part of your bill identified as the ‘unit cost’.
There are other charges involved in a business gas bill, but it’s these two that have the greatest impact. If you haven’t renegotiated a new gas deal in the past six months, it’s very likely that you’ll be overpaying for your energy, or at least be nearing the end of your contract and at risk of inflated business gas costs.
How much is an average business gas bill?
As all businesses use different amounts of gas, it’s not worthwhile comparing total costs. Instead, it’s better to compare your unit cost and standing charge with the average costs for businesses of a similar size. Suppliers understand the importance of you as a client, especially if you are likely to use a lot of energy. This means they’re likely to offer better-improved rates to those businesses requiring more energy.
Microbusinesses are those with up to ten employees. As they use a very little amount of energy, usually around 10,000 kWh per year, their gas bill will feature some of the highest costs – around 25p per day for the standing charge, with a unit cost between 4p and 4.5p.
Small businesses usually have a maximum of 50 employees and a turnover of no more than £3million per year. As they use, on average, between 15,000 and 30,000 kWh of gas per year, they receive slightly better rates than micro business. If you run a small business, you should expect your standing charge to be around 3.9p and your unit cost to not exceed 22p.
Businesses with between 51 and 250 members of staff generally receive the best rates – that’s because they use the most gas. Suppliers will buy the gas in bulk, getting a better wholesale deal and passing some of those savings on to the customer. By using over 30,000 kWh of gas per year, medium businesses can access unit costs of around 3.5p with a standing charge between 3.5 and 3.7p.
Overall, this results in the following costs for an average business gas bill:
- Microbusiness - £300 - £700 per year
- Small business - £800 - £1,400 per year
- Medium business - £1,500 - £2,000 per year.
What affects the cost of business gas bills?
The energy industry is victim to many worldwide factors which affect the cost of gas. This means the average business gas bill can fluctuate massively within a short period of time. For business owners, this makes understanding your gas bill and the prices you can expect a little difficult. Contrary to popular belief, prices don’t just increase because energy providers fancy a little extra cash.
Instead, there’s a number of factors that play a role, such as:
- The availability of gas
- Prices of crude oil
- Regulatory pressures.
The amount of gas stored in underground fields plays a key role in determining the average business gas bill. If gas is plentiful in these storage fields, prices will stay relatively stable, regardless of world events. However, when demand is high and storage low, you’ll likely see an increase in your average gas bill. You’ll also see an increase in price when these storage centres encounter issues with safety and delivery.
Gas flow and availability play a role too. If gas supply is not meeting demand, prices inevitably increase. This can often be due to natural events such as weather but can also be linked to problems within the supply lines too.
Crude oil prices make up a large part of the cost for business gas. The prices can be affected by a range of factors from the stock market to global politics. Put simply, any problems or potential risks to the production of crude oil will increase the wholesale cost of oil. In turn, you’ll see price increases for your gas bill payment too.
Regulatory pressures have recently become one of the largest influencers on the price of gas. With nearly all countries now looking to reduce their carbon emissions, governments have put charges into place for those who rely heavily on emission-heavy gas production. They’ve also put plenty of incentives in place too, to incentivise the move to more green energy. But if you’re not using renewable or low-carbon energy suppliers, you will likely keep seeing the price you pay for an average gas bill increase.
With so many factors affecting the price of energy, understanding your gas bill can be a little confusing. That’s why we recommend speaking to energy experts at Bionic. MoneySuperMarket has partnered with the UK's leading business energy broker to help you find a deal which will help you avoid future cost increases for business gas. Give Bionic a call now on 0800 088 6986.