Many business owners are often on the wrong energy deals for their business due to a lack of understand of their bills and their business’s energy requirements. The first thing to do to combat this is to better understand your gas and electricity bills.
Kilowatt Hours and MegaJoules
Your electricity usage is measured in Kilowatt Hours (KWh) and your gas will be measured in MegaJoules (Mj). To come up with the right level of kWh and Mj usage on your bill, your supplier will take your last, lower meter reading away from the current meter reading, providing you with a usage amount for that period. Sometimes, the kWh usage will be converted to MWh (Megawatt hours) – simply, there are 1,000 kWh in one MWh.
For a typical medium sized business, using between 20,000 and 160,000 kWh you are likely to be billed quarterly, but you may receive a monthly bill. For any business using more than 160,000 (160MWh), you will be billed monthly.
Most of the time, your usage is not charged back to you at a flat rate. Suppliers often create tiers of usage, and therefore tiers of pricing. You may be charged a low $ per kWh for the first 4,000 kWh of usage in a year, and then significantly higher price for the remaining usage. This means that it’s not good enough to accept a set of prices, and take the suppliers word that it’s cheaper. Our advice is to always calculate what a typical bill will be with the new prices compared to the old to properly assess how competitive or otherwise the deal is.
Peak vs. off-peak
Coupled with the usage breakdown, your kWh charges could also vary depending on the time of day you use the electricity. Simply put, using electricity at 4pm on a weekday could be much more expensive than 4pm at the weekend, not to mentioned charges being a lot cheaper at 4am in the morning.
You will always have a daily charge for the provision of electricity and gas to your business. These costs can vary massively between suppliers, especially when some supplier may look to re-coup margin through these charges not typically scrutinised by a business owner.
You may find that you have certain discounts on your business energy bills – they typically come in two forms:
- Pay on time: paying your bill within 10 days of receipt.
- Contract term discount: by committing to a supplier for 2 or 3 years, you may be offered additional discounts. In fact, if a supplier wants you to be a ‘loyal’ customer and give up your freedom to change suppliers for a period of time, we’d always recommend looking for an attractive discount incentive.
How are my energy bills calculated?
For each unit – Mj or KWh – of usage, every supplier has a specific charge. These charges will vary depending on the total amount of energy you use during the course of a year. There are even some charges that apply depending on the time of day you use your electricity or gas, whether you’re a business or home user. Keep in mind charges fluctuate, there are no pre-paid plans or electricity cap rates.
Switch and Save with Make It Cheaper
We work with leading retailers to find you a competitive deal for your business, then do all the legwork on the spot so you start saving, fast. Get in touch with Make It Cheaper today for a free energy review.
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