A business gas bill is an invoice detailing what a company needs to pay for using a mains gas supply over a billing period. It comes in various forms, depending on the business size, and the type of tariff and meter.
This guide explains how to read a bill, the difference between actual and estimated readings, how the bill is calculated, and what to do if it’s higher than expected or contains an error.
Business gas bill breakdown
The format of business gas bills varies between suppliers, but most contain broadly the same information, split into account and supply details, the commodity cost of the gas itself, the non-commodity costs of delivering it and funding energy policy, and taxes.
Not every component appears as a separate line, as many are built into the unit rate and standing charge depending on the contract type.
Account and supply details
These identify the business, its account, and the specific supply the bill relates to.
- Business and account information: Details identifying the company that occupies the supplied property and its account with the supplier.
- Supply and meter details: Information identifying the specific gas meter and supply point, such as the MPRN.
- Billing period: The dates the charges relate to.
- Meter readings and consumption: The readings taken and the total gas used, converted from cubic metres into kWh.
Standard gas charges
All business gas bills include the following standard set of charges.
- Gas unit rate: The business gas price per kWh of gas consumed. It is mostly made up of the wholesale cost of gas, which moves with supply and demand, market conditions and geopolitical events. This can be either a fixed rate agreed upfront, or a blended rate in flexible contracts.
- Standing charge: A fixed daily charge for maintaining a commercial gas connection with the mains, which usually includes a share of non-commodity costs and covers the suppliers operating costs.
Non-commodity costs and environmental levies
Non-commodity costs and environmental levies are charges set by regulators, industry bodies and government rather than by the supplier.
In simple fixed energy contracts, these are incorporated into unit and standard charges. In pass-through contracts these are charged as separate lines on the business gas bill.
- Transportation charges: Cover the cost of moving gas through the National Transmission System (NTS) and the Local Distribution Zone (LDZ) networks to the site.
- Metering charges: Cover the cost of providing and maintaining the gas meter. They are usually included in the standing charge, but may be itemised for larger sites.
- Green Gas Levy: Funds the Green Gas Support Scheme, which supports the production of biomethane injected into the gas grid. It is charged per supply point and usually included in the standing charge.
- Hydrogen Levy: A planned levy, known as the Gas Shipper Obligation, that will fund low-carbon hydrogen production. It will be charged to gas shippers and passed on to businesses through their bills.
Taxes and payments
These finalise the total amount owed for the billing period.
- Taxes: Charges such as CCL (Climate Change Levy) and VAT applied on top of the usage, standing and non-commodity charges.
- Payments, credits or adjustments: Any prior payments, credits, or corrections reflected in the current bill.
- Total amount due: The final amount payable for the billing period.
Actual and estimated business gas bills
The largest contributor to a business gas bill is typically the gas consumption for a billing period multiplied by its unit rate.
However, gas consumption can be measured in different ways, depending on their situation and meter type, and even estimated when getting a reading is not possible.
The gas consumption used on a business gas bill can come from one of the following three sources of information:
- Actual meter readings: A reading taken directly from the meter, either by a technician visiting the site or automatically via a smart meter. It is the most accurate reading for a bill.
- Customer-submitted readings: A reading the customer itself takes from the meter and submits to the supplier.
- Estimated readings: A reading the supplier calculates based on historical usage patterns, used when no actual or customer-submitted reading is available.
What happens when an estimated reading is corrected?
Estimated readings are a modelled approximation based on prior meter readings. They act as a temporary measure until a real reading becomes available to correct them.
Once one is taken by a technician, submitted by the business, or collected automatically via a smart meter, the difference between them will be corrected on the next bill as follows:
- An underestimated reading: Results in a balancing charge added to a later bill, covering the gas used but not yet paid for.
- An overestimated reading: Results in a credit, either refunded or offset against future bills.
Repeated inaccurate estimates over a long period can lead to a large correction landing on a single bill.
VAT and Climate Change Levy on business gas bills
Business gas bills include two taxes on top of the usage and standing charges, VAT and the Climate Change Levy.
- VAT: Charged at the standard rate of 20%, or a reduced rate of 5% where the business uses low volumes of gas, is a charity, or the gas is used mainly for residential or certain non-business purposes.
- Climate Change Levy (CCL): A government levy charged per kWh of gas used. Businesses holding a Climate Change Agreement pay a discounted rate.
How is a business gas bill calculated?
Calculating a business gas bill starts with a consumption figure, then applies the relevant rates and charges to it to calculate how much is owed. Here’s the step-by-step process for a typical business gas bill:
1. Gas consumption is measured or estimated
Every calculation starts with a raw volume of gas used, in cubic metres (m³). The bill shows an opening and closing meter reading for the billing period, with the difference between the two giving the volume consumed.
These readings are usually actual, taken by a smart meter or technician for manual meters, but can also be submitted by the business itself or, in some cases, estimated.
2. Gas volume is converted into kWh
Business gas contracts price the unit rate in pence per kWh, so the volume measured at the meter needs to be converted into an energy figure in kWh.
The calculation multiplies the volume used by the calorific value of the gas (a measure of its energy content) and a volume correction factor, then divides by a fixed conversion figure.
3. Unit rate is applied to gas consumption
Once consumption is known in kWh, it’s multiplied by the agreed unit rate (p/kWh) to calculate the base cost of the gas used.
On a flexible energy contract, this rate is a blended average of the rates secured across the tranches purchased throughout the contract, rather than a single fixed figure.
On fixed contracts, the unit rate also includes bundled non-commodity costs, and on green contracts, the cost of biomethane certificates.
4. Standing charge is added
A fixed standing charge (£/day) is added, multiplied by the number of days in the billing period, regardless of how much gas was used.
5. CCL is added
The Climate Change Levy is added, charged per kWh of gas consumed at the current government published rates, unless the business qualifies for an exemption.
6. VAT is added
VAT is applied to the net total of the charges above, at the standard rate of 20%, or the reduced rate of 5% where the business qualifies.
7. Previous balances or credits are adjusted
Any previous balance, credit, or correction from an earlier bill is added or deducted to arrive at the final total amount due.
Why is my business gas bill higher than expected?
A higher than expected business gas bill usually comes down to one of a few common causes, most of which relate to how consumption or charges were calculated rather than an error in the total itself:
- Estimated readings: If a bill is based on an estimated reading, it will likely overstate or understate what is owed. An underestimate is the risk, since the correction landing on a single later bill may be large.
- Longer billing period: A bill can cover more days than usual due to a delayed previous bill, a change in billing frequency, or a new or switched supply not yet aligned to a standard billing cycle. This results in both higher standing charges and consumption.
- Increased consumption: Genuine changes in usage, such as colder weather, increased operating hours, or added equipment, raises consumption and therefore the total owed.
- Rate change: A bill can rise if the unit rate or standing charge increases, whether from falling onto a supplier’s “out of contract” rate after a fixed term ends without a new contract in place, or a market movement on a flexible contract. Compare business gas prices to secure a better rate before this happens.
- Incorrect meter reading: A misread or mistyped reading, either by the business or the supplier, can significantly overstate consumption for that period. Contact your business energy supplier to amend this.
What to do if your business gas bill is wrong
If a bill looks wrong after checking it, the following steps help resolve it with the supplier.
- Take a current meter reading and compare it against the reading used on the bill.
- Check the bill against the current contract, confirming the unit rate, standing charge and billing period are correct.
- Contact the supplier directly to raise the discrepancy, providing the correct reading or details of the error.
- Ask the supplier to explain how the charge was calculated, if the reason for the discrepancy isn’t clear.
- Request a corrected bill once the supplier confirms the error.
How to check a business gas bill
Checking a business gas bill requires reviewing each line of the charges calculation to ensure the business is paying the right amount according to its agreed tariff:
- Confirm the business name, account number and supply address match the correct site.
- Check the MPRN matches the meter at the property.
- Confirm the billing period covers the correct dates with no gaps or overlaps.
- Check whether the reading used is actual, customer-submitted, or estimated.
- Compare the meter reading shown against the physical meter, where possible.
- Confirm the consumption figure in kWh looks in line with typical usage for the period.
- Check the unit rate matches what’s set out in the current contract.
- Confirm the standing charge and number of billed days are correct.
- Check that CCL and VAT have been applied correctly, including any exemptions the business qualifies for.
- Review any previous balances, credits, or adjustments listed on the bill.
- Add up the charges to confirm the total amount due is correct.
For businesses managing several sites or invoices, checking every bill manually can be onerous. Our Energy Bureau Service does this for you, validating bills against contracted rates and requesting changes with suppliers for any errors.
Final business gas bills after switching or moving premises
A final bill is issued whenever a business’s relationship with a supplier or a specific meter ends, whether that is after switching to a different supplier or when moving premises:
After switching gas supplier
When a business switches to a new supplier, the previous supplier issues a final bill covering usage up to the switch date, based on a final meter reading, either taken by the business, an automated reading, or an estimate if no real reading is available at that point.
Any final balance, whether owed or refunded, is settled separately from the new contract with the incoming supplier.
After moving business premises
When a business moves premises, it should take a final meter reading on the day it vacates the site, which the outgoing supplier uses to issue a final bill for that address.
Since the new occupier becomes responsible for the meter from that date, providing an accurate final reading helps avoid being billed for gas used after the business has left.
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