Estimated Annual Consumption (EAC) is the energy industry’s official estimate of how much electricity a supplied property will use in a year, and it shapes the quotes, contracts and bills it receives.
This guide explains what the EAC is, how it is calculated, where to find it, and how a business can correct it to get more accurate quotes and bills.
What is Estimated Annual Consumption (EAC)?
Estimated Annual Consumption (EAC) is the industry’s official estimate of how much electricity will be drawn from a specific mains electricity connection each year, measured in kWh.
It is calculated using a standard methodology set out in the Balancing and Settlement Code, the rulebook that governs how electricity suppliers are charged for the energy their customers use, managed by Elexon.
Business energy suppliers use the EAC to price quotes and contracts, and to estimate bills when no actual reading is available, which is why an erroneous EAC can lead to inaccurate quotes and business electricity bills.
The business gas connection equivalent is the Annual Quantity (AQ), which estimates the annual gas consumption of a specific MPRN.
Who gets an EAC and who calculates it?
Every electricity supply point is given an EAC automatically against its MPAN, with no request needed from the consumer or its supplier.
The EAC is calculated and updated by a data collector, an accredited company that every supplier must appoint to process its customers’ meter readings.
Queries about Estimated Annual Consumption must be made through the registered supplier.
How is Estimated Annual Consumption calculated?
The data collector calculates the EAC from the best consumption data available for each supply point:
EAC calculation from half-hourly data
For smart and half-hourly meters, which record consumption every 30 minutes, the EAC is based on the site’s actual usage, broadly calculated as a rolling total of the most recent 12 months:
EAC (kWh) ≈ Sum of half-hourly consumption over the previous 12 months
As each new month of data comes in, the oldest drops out, so if consumption rises, the EAC rises with it. Where less than a year of data is available, the recorded usage is scaled up to a full year.
EAC calculation from periodic meter readings
For traditional meters, the EAC is estimated by scaling the consumption between two readings up to a full year, using industry load profiles that reflect typical seasonal usage:
Annualised consumption (kWh) = Consumption between readings ÷ Share of annual consumption expected in that period
For example, 3,000 kWh used over a period that normally accounts for 30% of annual consumption gives an EAC of 10,000 kWh.
The more regular the readings, the more accurate the EAC.
EAC calculation when no actual readings are available
New supplies, or those without reliable readings, are given a default EAC based on industry averages, or the expected usage provided at setup.
This stays in place until actual readings are available.
Supplier estimates of annual consumption
Suppliers may also use their own annual estimates, separate from the official EAC held on industry records, to set Direct Debits, estimate bills and prepare quotes.
These often draw on more recent information, such as smart meter readings or site changes, but have no standard method, so if one looks too high, the business can submit a reading or ask for a review.
Does EAC affect business electricity prices or bills?
Estimated Annual Consumption is one of the most influential figures behind business electricity prices, shaping the quotes a business receives, its bills, and the charges on some contracts.
Here is how it affects each:
The effects of EAC on business electricity quotes
Suppliers typically price quotes using the EAC, as it determines how much energy they buy in advance on the business’s behalf. When comparing business electricity quotes it’s important to consider whether the EAC used accurately reflects how much power you expect to be used.
The effects of EAC on estimated bills
Without an actual reading, suppliers estimate usage from the EAC. One that is too high leads to overcharging, while one that is too low leads to undercharging, and a larger catch-up bill later. The same applies to Direct Debits, which are often based on the EAC.
The effects of EAC on fixed contracts with volume tolerances
Some fixed energy contracts set an agreed range around the EAC, known as a volume tolerance. If usage falls significantly outside it, the supplier may charge for the difference, having bought too much or too little energy in advance.
The effects of EAC on flexible contracts
On flexible energy contracts, the EAC determines how much energy is bought on the business’s behalf, in stages.
If usage is higher, the shortfall must be bought later, often at higher prices, while lower usage leaves surplus energy to be sold back, potentially at a loss. As the business carries this risk, an accurate EAC is essential.
Where can a business find its EAC?
A business can usually find its EAC, or an annual consumption estimate, in the following places:
- The supplier’s online account: Many suppliers show annual usage alongside past consumption, though this may be the supplier’s own estimate rather than the EAC.
- Energy bills, contracts or renewal letters: Some bills show annual usage, however this may be the supplier’s own estimate and not the EAC. Contracts and renewal letters will also quote an estimated consumption figure.
- The supplier or a broker directly: To be sure of the EAC held on industry records, the business can ask its supplier for the EAC held against each MPAN, or a broker can check it as part of the business energy comparison process.
Why might the business’s EAC differ from the usage shown on a bill?
The EAC and the usage shown on a bill mean fundamentally different things:
- EAC: The industry’s official annual estimate of how much electricity a supply will use, used mainly for settlement and pricing.
- Usage on a bill: The electricity used during that billing period, either measured by actual meter readings, or estimated by the supplier when no reading is available.
A bill always charges for the usage in that period, not the EAC. However, when no actual reading is available, the supplier may use the EAC to estimate that usage.
Why is my Estimated Annual Consumption too high or too low?
An EAC is too high or too low when it does not match how much electricity the business actually expects to use in the coming year.
Here are the typical reasons the EAC may be too high or too low:
The business’s usage has changed
The EAC is based on past consumption, so it lags behind any change in how the site uses electricity, such as:
- Different opening hours: Longer or shorter hours change how much electricity is used each day.
- Changes in activity or equipment: Adding or removing machinery, or an increase or decrease in production.
- Vacant periods: An empty site uses far less electricity, while the EAC may stay at its previous level.
- Energy-efficiency measures: Upgrades such as LED lighting or more efficient equipment reduce consumption.
- Onsite generation: Solar panels or other generation reduce the electricity drawn from the grid.
- A previous occupier: The MPAN and its EAC stay with the premises, so a business moving in may inherit an EAC based on the previous occupier’s usage.
The data behind the EAC is inaccurate
The EAC can also be inaccurate because of problems with the readings or records it is based on:
- Missing actual readings: Without regular actual readings, the EAC stays at a default industry estimate, or at an outdated figure.
- Incorrect readings or records: A misread reading, a faulty or replaced meter, or incorrect meter details on industry records can all push the EAC too high or too low.
Can a business get its EAC corrected?
Yes, since the EAC is recalculated from actual readings, the most effective way to correct it is to provide updated data by:
- Submitting actual meter readings: Send the supplier an actual reading, ideally with a dated photo of the meter. Regular readings bring the EAC closer to real usage over time.
- Asking the supplier to review it: If the EAC is significantly wrong, the supplier can ask its data collector to review and correct it, particularly where there is evidence such as meter photos, past bills or details of changes at the site.
- Installing a smart meter: A smart meter sends readings automatically, keeping the EAC up to date without the business needing to submit readings.
Business energy monitoring can help a business identify when consumption changes, such as after new equipment is added, so it can submit a reading or ask for a review to ensure any estimates remain accurate.
Note that since each new reading is blended with the previous EAC, it may take more than one reading for the figure to fully reflect real usage.
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