Plain-English definitions for business energy terminology. Whether you're reviewing a contract, querying a bill or switching supplier, this glossary explains the terms you need to know.
Back billing occurs when an energy supplier issues a bill for energy consumed in a previous period that was not billed at the time — typically due to estimated readings or a billing error. Ofgem's back billing rules state that suppliers cannot charge business customers for unbilled energy that is more than 12 months old, provided the customer did not prevent the supplier from billing correctly.
More terms coming soon
Suggest a term →Capacity charges (also called availability charges or agreed capacity charges) are fees based on the maximum amount of electricity your premises is set up to receive from the grid, regardless of how much you actually use. They appear on half-hourly metered electricity bills and are expressed in pence per kVA per day. Reviewing your agreed capacity can reduce costs if your actual demand is lower than your contracted capacity.
A change of tenancy is the process by which a new business takes over responsibility for the energy supply at a premises. When you move into new business premises, you must notify the existing energy supplier, provide opening meter readings and arrange a new contract. Failure to complete a COT correctly can result in billing disputes or liability for a previous occupier's energy debt.
The Climate Change Levy is a government tax on energy used by businesses, charged per kWh of electricity and gas consumed. It appears as a separate line on your energy bill. Some businesses in energy-intensive sectors may qualify for a CCL discount or exemption. Energy from qualifying renewable sources may also be exempt. The CCL rate is set by HMRC and changes periodically.
The contract end date is the date on which your fixed-term energy contract expires. It is one of the most important dates for any business energy customer. Missing the notice period before this date can result in your contract automatically rolling over onto a higher rate. We recommend starting the renewal process at least six months before your contract end date.
More terms coming soon
Suggest a term →Deemed rates are the default unit rates and standing charges applied by an energy supplier when a business has no contract in place. This typically occurs when a business moves into new premises, when a contract expires without renewal, or when a rollover is triggered. Deemed rates are almost always significantly higher than contracted rates and should be avoided by arranging a new contract as quickly as possible.
Distribution Use of System charges are fees paid to the local electricity distribution network operator (DNO) for transporting electricity from the national transmission network to your premises. DUoS charges vary by region and time of day, and are typically passed through to customers as part of their electricity unit rate or as separate line items on half-hourly metered bills.
More terms coming soon
Suggest a term →An energy broker, also known as a Third Party Intermediary (TPI), is an independent business that compares energy prices from multiple suppliers on behalf of customers. Brokers are paid a commission by the energy supplier when a contract is agreed. A reputable broker will disclose their commission on request. The Best Energy Rates is registered with the Broker ADR scheme (ID: C35THEB04).
Energy procurement is the process of sourcing and purchasing energy contracts for a business. For smaller businesses this typically means comparing suppliers and securing the best available fixed-rate contract. For larger businesses it can involve strategic decisions about contract structure, purchasing timing, risk management and sustainability — including flexible purchasing strategies that buy energy in tranches over time.
An estimated bill is issued when your supplier does not have an actual meter reading and instead calculates your consumption based on historical usage data. Estimated bills can be higher or lower than your actual consumption. If you receive estimated bills, submit actual meter readings regularly to ensure accurate billing. Persistent estimated billing can lead to back billing disputes.
More terms coming soon
Suggest a term →A fixed-rate energy contract locks in your unit rate and standing charge for the duration of the agreed contract term — typically one to five years. This provides price certainty and makes energy budgeting straightforward. You will not benefit if wholesale prices fall during the contract period, but you are protected if prices rise.
Flexible energy purchasing is a procurement strategy where energy is bought in tranches over time rather than fixing the entire contract at once. This approach allows businesses to take advantage of favourable market movements while managing downside risk. It is typically suited to larger businesses with significant energy spend and requires active management and market monitoring.
More terms coming soon
Suggest a term →A half-hourly meter records your electricity consumption every 30 minutes and automatically sends the data to your supplier. Businesses with a maximum demand of 100kW or more (Profile Class 00) are required to have a half-hourly meter. HH metering enables more accurate billing, access to time-of-use tariffs and detailed consumption analysis. HH meters are also known as AMR (Automated Meter Reading) meters.
More terms coming soon
Suggest a term →kVA is a unit of apparent electrical power, used to measure the capacity of an electrical supply. It differs from kW (kilowatts), which measures actual power consumed. The ratio between kW and kVA is known as the power factor. For businesses with half-hourly meters, your agreed supply capacity is expressed in kVA and forms the basis of capacity charges on your bill.
A kilowatt-hour is the standard unit of energy measurement used on business energy bills. One kWh is the amount of energy used by a 1,000-watt appliance running for one hour. Your energy consumption is measured in kWh and multiplied by your unit rate (pence per kWh) to calculate the energy element of your bill.
More terms coming soon
Suggest a term →A Letter of Authority is a document that authorises a third party — such as an energy broker — to act on your behalf when dealing with energy suppliers. It allows the broker to obtain contract information, request quotes and manage the switching process. An LOA is typically required before a broker can access your account details from your current supplier.
More terms coming soon
Suggest a term →An MPAN is a unique 21-digit reference number that identifies your electricity supply point. It is sometimes called a Supply Number or S-Number and appears on your electricity bill, usually preceded by the letter 'S'. Your MPAN is required when switching electricity supplier, requesting a quote or raising a query with your supplier. It identifies the physical supply point, not the meter itself.
An MPRN is a unique reference number that identifies your gas supply point. It is sometimes called a Gas Supply Number and appears on your gas bill. Like the MPAN for electricity, your MPRN is required when switching gas supplier, requesting a quote or raising a query. It identifies the physical gas supply point at your premises.
More terms coming soon
Suggest a term →The notice period is the window during which you must inform your current energy supplier that you intend to switch or renegotiate at the end of your contract. Missing the notice period can result in your contract automatically rolling over onto a higher rate. Notice periods vary by supplier but are typically between 30 and 90 days before the contract end date. Always check your contract terms.
More terms coming soon
Suggest a term →Out-of-contract rates (also called deemed rates or uncontracted rates) are the rates applied by a supplier when a business has no active fixed-term contract in place. These rates are set by the supplier and are typically significantly higher than contracted rates. Businesses on out-of-contract rates should arrange a new contract as quickly as possible to reduce costs.
More terms coming soon
Suggest a term →Profile class is a number (00–08) assigned to an electricity meter that describes the typical consumption pattern of the customer. It is used by suppliers and network operators to estimate consumption between meter reads. Profile class 00 indicates a half-hourly metered supply. Classes 01–08 apply to non-half-hourly meters, with class 03 and 04 typically assigned to small and medium businesses.
More terms coming soon
Suggest a term →A rollover contract occurs when a business energy contract automatically renews at the end of its term, usually at a higher rate, because the customer did not give notice within the required notice period. Many suppliers include rollover clauses in their standard terms. To avoid being rolled over, start the renewal process at least six months before your contract end date and check your notice period carefully.
More terms coming soon
Suggest a term →A smart meter automatically records your energy consumption at regular intervals and sends the data directly to your supplier via a secure wireless network. This eliminates the need for manual meter readings and enables more accurate billing. Second-generation (SMETS2) smart meters are designed to work across different suppliers. Business smart meters are being rolled out as part of the government's national smart meter programme.
The standing charge is a fixed daily fee charged by your energy supplier regardless of how much energy you use. It covers the cost of maintaining the energy network and your connection to it. Standing charges are expressed in pence per day and vary between suppliers, tariffs and meter types. Both the unit rate and standing charge should be considered when comparing energy quotes.
A supplier objection occurs when your current energy supplier raises a formal objection to block a switch to a new supplier. Valid grounds for objection include an outstanding debt on the account, an active fixed-term contract, or a dispute about the meter point. Suppliers cannot object simply to retain a customer. If you believe an objection is unjustified, you can raise a complaint with your supplier or seek independent advice.
Supplier switching is the process of moving your business energy supply from one supplier to another. The switch is managed by your new supplier and does not interrupt your energy supply. Most business switches complete within four to six weeks. You can switch at the end of your contract term without penalty, or mid-contract subject to any early termination fees in your existing agreement.
More terms coming soon
Suggest a term →A Third Party Intermediary is the regulatory term for a business that acts as an intermediary between energy customers and suppliers — including energy brokers, consultants and comparison services. TPIs are not currently regulated by the FCA but are subject to Ofgem's TPI code of practice. The Best Energy Rates is a registered TPI and a member of the Broker ADR scheme.
Transmission Use of System charges are fees paid to National Grid for transporting electricity across the high-voltage national transmission network. TNUoS charges are typically passed through to customers as part of their electricity unit rate. They vary by location and are higher in areas further from major generation sources.
More terms coming soon
Suggest a term →The unit rate is the price you pay per kilowatt-hour (kWh) of energy you consume. It is expressed in pence per kWh and is the primary component of your energy bill. Your total energy cost is calculated by multiplying your consumption by the unit rate, then adding the standing charge. When comparing energy quotes, always consider both the unit rate and the standing charge.
More terms coming soon
Suggest a term →A variable rate energy contract means your unit rate can change during the contract term, typically in line with wholesale energy market movements. Unlike a fixed-rate contract, there is no price certainty. Variable rates can be advantageous when wholesale prices are falling but carry significant risk when prices rise. Most small and medium businesses benefit from the predictability of a fixed-rate contract.
Most businesses pay 20% VAT on their energy bills. However, businesses that use energy primarily for non-business purposes, or that have low consumption (below 33kWh per day for electricity or 145kWh per day for gas), may qualify for the reduced 5% rate. Charities, places of worship and certain other organisations may also be eligible for VAT relief. VAT declarations must be submitted to your supplier.
More terms coming soon
Suggest a term →Send us a photo of your business energy bill via WhatsApp and one of our specialists will explain exactly what you're being charged — and whether you're paying too much.
