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Understanding your business gas bill
Monthly gas bills can be confusing. They can be several pages long and include complex calculations for consumption and charges, even for the smallest UK retailers.
This guide clarifies each section of a standard UK business gas bill, in order, so that you can clearly understand your costs hereon.
Sections of the UK Business Gas Bill:
Your site details
Business gas bills are always associated with an individual gas supply point. Your bill will display:
- The commercial property address where your gas is supplied
- The MPRN associated with the gas connection.
- Your business gas meter ID.
- The legal name of the company occupying the property (responsible for paying the bill).
💡 In a deemed energy contract, the bill may be addressed to the “Current Occupier” as the supplier may not know which business occupies the property.
Your tariff details
Most business gas bills display the details of your current contract with your supplier, including:
- Tariff name
- Payment method
- Contract end date
- Estimated annual gas consumption
The business gas tariff details determine the business gas rates and standing charges used to calculate your bill.
Your gas meter readings
Gas connections at commercial properties in the UK are generally equipped with a gas meter to measure consumption.
A business gas bill will state the gas meter readings for the billing period. These are either:
- Actual readings – Where you have submitted a meter reading to your supplier or where a smart gas meter automatically provides the readings.
- Estimated readings – Where your supplier estimates your readings in the absence of actual meter readings.
Gas meter readings are usually recorded in cubic meters or cubic feet of gas consumed.
Gas consumption conversion
All business gas suppliers in Britain define their rates in kWh rather than in the volumetric measurements (cubic meters or feet) shown on your meter.
All bills include a conversion calculation to translate your meter readings into kWh.
Below, we explain how this calculation works, but first, here’s how this conversion is typically presented on a business gas bill:
Metric gas meter consumption calculation:
Used when you have a gas meter that measures gas consumption in cubic meters:
Gas consumption in kWh = Difference in gas meter reading (m³) × Volume correction factor × Calorific value ÷ Conversion factor
Imperial gas meter consumption calculation:
Used when you have a gas meter that measures gas consumption in cubic feet:
Gas consumption in kWh = Difference in gas meter reading (ft³) × Conversion factor to cubic meters × Volume correction factor × Calorific value ÷ Conversion factor
Gas consumption conversion figures
- The volume correction factor is an industry figure to account for atmospheric pressure, typically around ~1.02.
- The calorific value adjusts for changes in the composition of gas when burned. It can vary slightly per supplier. Typically, ~39 MJ/m³ is considered a reasonable estimate.
- The energy conversion factor is used to convert from joules to kWh, which is 3.6.
- The volume conversion factor to change from ft³ into m³ is ~0.028.
Your business gas charges
The business gas charges section of your bill calculates your total business gas bill by adding up the following four separate elements:
Business gas consumption charge
This is calculated as your gas consumption during the billing period (calculated above) multiplied by the unit gas rate per kWh agreed upon in your tariff.
Business gas standing charge
This is the daily standard charge agreed upon in your tariff, multiplied by the number of days in the billing period.
Climate change levy
This government tax is paid for each kWh of gas consumed. Since 1 April 2024, the climate change levy for gas is 0.775 p/kWh.
💡 Microbusinesses and charities are exempt from the climate change levy on gas bills.
VAT
VAT is a consumption tax that the UK government levies on the sale value of goods and services. Most businesses pay 20% VAT on top of the three charges above.
Microbusinesses and charities pay VAT on business gas bills at the reduced rate of 5%. For more information, see our guide for VAT on business energy bills.
What costs make up the business gas bill?
Here are the four most important costs associated with delivering a business gas supply in the UK:
1. The wholesale cost of gas
The majority of business gas rates come from the wholesale purchase of natural gas. Natural gas is a fossil fuel extracted from underground gas reserves. About half of the natural gas used in Britain comes from Scotland’s North Sea reserves, with the rest imported from gas-producing nations like Norway, Sweden and Russia.
A business gas supplier purchases natural gas in bulk from the wholesale market to meet the supply needs of its customers. The wholesale cost of gas is paid to the operators of the North Sea gas fields or to gas importers.
2. Transportation and distribution costs
The national gas grid is a network of pipes that moves gas from the North Sea to the properties that use gas. Business energy suppliers incur business gas distribution costs for moving the gas to your business property, including:
- A system operator capacity charge – A charge paid to the national grid to cover the cost of making gas capacity available to each supplier.
- A shaping charge – A risk management charge the suppliers need to pay for using the national grid to transport gas.
- Unidentified gas losses charge – A charge shared among all users of the national gas network that covers losses in the network from illegal extraction and unregistered supply points.
3. Metering charges
The gas used by commercial properties is measured using a gas meter. Your business gas supplier incurs the following metering costs:
- Meter rental charge – A meter asset management company owns commercial gas meters. Your business gas supplier pays this company to rent your meter during the period they are supplying gas to your property.
- Meter reading charge – Business gas meters are periodically read and checked by your business energy supplier. Employing the metering team is a significant cost incurred by your supplier.
Where your property has a smart gas meter, your supplier will also incur additional costs for the communication system that provides automatic meter readings.
4. Business gas supplier margin
Business gas suppliers are for-profit companies that seek to earn a margin on top of all their costs. Suppliers compete with each other to offer the most competitive business energy tariffs.
Find the best deals for your business with our compare business energy service.
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