Why Is My Business Energy Bill Suddenly So High?

A business energy bill that's suddenly much higher than usual is one of the most common things we're asked about. It's alarming when it happens, and the instinct is often to assume the supplier has made a mistake.

Sometimes they have. But more often, there's an explanation — and once you understand it, you can work out whether the bill is correct or whether it needs to be challenged.

Here's how to approach it.

Before we look at anything else — before we compare prices, before we talk about switching, before we do anything — we ask for a current meter reading.

This is not a formality. It's the most important piece of information in the whole picture.

A meter reading tells us whether the bill is based on actual consumption or an estimate. It tells us whether the consumption on the bill is plausible. And it tells us whether there's a catch-up situation in play — where previous bills were based on estimates that were too low, and the supplier is now correcting the shortfall.

If you're worried about a high bill, take a meter reading right now. Photograph it. Write down the date and time. That reading is the foundation of everything else.

Most business energy bills are based on either an actual meter reading or an estimated one. Actual readings come from a meter reader visiting your premises, from you submitting a reading yourself, or from a smart meter sending data automatically. Estimated readings are calculated by the supplier based on your historical usage.

The problem with estimated readings is that they can be wrong — sometimes significantly wrong.

If your supplier has been underestimating your consumption for several months, your bills will have been lower than they should have been. When an actual reading is eventually taken, the supplier recalculates and issues a corrective bill covering the shortfall. This is called a catch-up bill, and it can be large.

Conversely, if the supplier has been overestimating, you'll have been overpaying. In that case, you're owed a credit.

The letter "E" next to a meter reading on your bill means it's estimated. If you've been receiving estimated bills for a long time, a catch-up bill is a real possibility.

A catch-up bill arrives when an actual meter reading is taken after a period of estimated billing, and the actual reading is significantly higher than the estimates suggested.

Here's a simple example. Suppose your supplier has been estimating your monthly consumption at 1,000 kWh, but your actual consumption is 1,400 kWh. After six months, the supplier takes an actual reading and discovers you've used 8,400 kWh — but they've only billed you for 6,000 kWh. The catch-up bill covers the 2,400 kWh difference.

If you receive a catch-up bill, the first thing to do is verify the meter reading. Check the reading on the bill against your meter. If the reading is correct, the bill is likely valid — though you may be able to negotiate a payment plan if it's a large amount.

If the reading doesn't match your meter, contact your supplier immediately and provide your own reading with photographic evidence.

Take a reading from your meter and compare it to the reading on your bill. They should be close — if your bill is recent, they should be very close.

If the reading on your bill is significantly higher than your meter, something is wrong. Either the meter reader recorded the wrong number, or the bill has been issued against the wrong meter. Both happen occasionally.

If the reading on your bill is significantly lower than your meter, you may be due a catch-up bill in the near future — or the current bill may already be a catch-up.

Keep a log of your meter readings. Take a reading at the start of each month, photograph it, and note the date. This takes two minutes and can save you a great deal of trouble if a billing dispute arises.

Pull out your last three or four bills and compare them. Look at:

The unit rate. Has it changed? If your unit rate has increased, that alone could explain a higher bill — even if your consumption is the same.

The standing charge. Has this increased? A higher standing charge adds to every bill regardless of consumption.

The consumption figure. Is the kWh figure on the current bill higher than usual? If so, is that because of actual higher usage, or because of a catch-up from estimated billing?

Whether bills were estimated or actual. If the last few bills were estimated and the current one is actual, that's a strong indicator of a catch-up situation.

Your unit rate is the price you pay per kWh of energy. It's the single biggest driver of your energy cost, and it's the first thing to check when a bill seems high.

Your unit rate should be fixed for the duration of your contract. If it's changed, either your contract has ended and you've moved onto Variable Business Rates, or your supplier has made an error.

Check your contract documents. What unit rate did you agree? What does your current bill show? If they're different and your contract hasn't ended, contact your supplier and ask for an explanation.

If your contract has ended, you're almost certainly on Variable Business Rates — which are typically significantly higher than contracted rates. See our guide on Variable Business Rates for more on this.

The standing charge is a fixed daily fee that applies regardless of consumption. It's easy to overlook because it doesn't change with your usage, but it can still increase if your contract has ended or if your supplier has changed their rates.

Check the standing charge on your current bill against your contract. If it's higher than agreed, ask your supplier why.

If your contract has expired and you haven't arranged a new one, you'll be on Variable Business Rates. These are the supplier's out-of-contract rates, and they're almost always higher than what you'd pay on a fixed contract.

Variable Business Rates can change at any time. If your supplier has increased their VBR rates since you moved onto them, your bills will have gone up even if your consumption hasn't changed.

The solution is to arrange a new fixed contract. Contact us and we'll compare the market for you.

If you want us to review your bill — or if you're going to contact your supplier to query it — having the following information ready will make the process much faster:

A current meter reading, taken today, with a photograph.

Your last two or three bills, so we can compare consumption and rates over time.

Your contract documents, or at least the unit rate and standing charge you agreed when you last signed a contract.

The MPAN (electricity) or MPRN (gas) from your bill — these are your meter reference numbers.

The name of your current supplier and your account number.

Any correspondence from your supplier about rate changes, contract renewals or billing adjustments.

With those in hand, we can usually work out what's happened within a few minutes and tell you whether the bill is correct, whether it needs to be challenged, and whether there's a better deal available.

You can upload your bill on our website or call us on 01256 844048.

Related guides: What Are Variable Business Rates? · Understanding the 12 Month Backbilling Rule · How To Read A Business Energy Bill