Business energy glossary: 57 terms explained

Plain-English definitions of the terms you'll meet on business energy bills, contracts and quotes. Each links to a fuller guide where there is one.

A

Annual quantity (AQ)

An industry estimate of how much gas a supply point uses in a year, recalculated from meter readings. Suppliers use it to price gas contracts. Read more

Automated meter reading (AMR)

A meter that sends readings to the supplier automatically, reducing estimated bills.

B

Baseload

The electricity a site uses when it is closed or idle, such as refrigeration, IT and equipment left running. Read more

Basket (flexible basket)

A flexible purchasing product where several customers’ energy volumes are pooled and bought over time by a basket manager to an agreed risk strategy. Read more

Broker

An intermediary who compares supplier offers for a business and arranges a contract, usually paid commission by the supplier. Read more

Broker commission

The fee paid to a broker, usually built into the unit rate or standing charge. For contracts from 1 October 2024, suppliers must show it in the principal terms. Read more

C

Calorific value

The energy content of gas, used to convert the volume your meter records into kWh. Read more

Capacity charge

A daily charge on many half-hourly electricity supplies, based on the agreed supply capacity in kVA. Read more

Change of tenancy

The process when a business moves into or out of premises and responsibility for the energy supply changes. Read more

Climate Change Levy (CCL)

An environmental tax on energy used by businesses, charged per kWh. Low-use supplies are exempt. Read more

Co-terminus contracts

Contracts for several sites that all end on the same date, making renewals easier to manage. Read more

Contract end date

The date a fixed-term energy contract finishes. The most important date for avoiding out-of-contract rates. Read more

D

Deemed contract

The arrangement that applies when a business uses energy at premises without having agreed a contract. Deemed rates are usually high. Read more

De minimis threshold

The low-use limit below which business energy is charged 5% VAT and no Climate Change Levy: 33 kWh a day of electricity or 145 kWh a day of gas. Read more

Distribution Network Operator (DNO)

The company that owns and runs the local electricity network in your region.

DUoS charges

Distribution Use of System charges: the cost of using the local electricity network, often varying by time of day. Read more

Dual fuel

Buying electricity and gas from the same supplier, usually still under separate contracts. Read more

E

Energy Ombudsman

An independent body that can resolve some complaints about energy suppliers, including for micro and small businesses. Read more

Estimated reading

A meter reading the supplier has estimated rather than taken, usually marked E on a bill. Read more

Excess capacity charge

A charge for using more electricity at once than your agreed supply capacity. Read more

Export MPAN

A separate MPAN for electricity a site generates and exports to the grid, for example from solar panels. Read more

F

Fixed-price contract

A contract where the price is agreed for the whole term. Some fixed contracts pass certain costs through. Read more

Flexible procurement

Buying energy in stages over time against the wholesale market, to an agreed strategy. Read more

H

Half-hourly (HH) meter

A meter that records electricity use for every 30-minute period, 48 readings a day. Read more

K

kVA

Kilovolt-ampere, the unit used for the agreed supply capacity of many larger electricity supplies. Read more

kWh

Kilowatt hour, the unit energy is billed in. One kWh is a 1 kW appliance running for one hour.

L

Letter of authority (LOA)

A signed document allowing a broker to request your data and prices from suppliers on your behalf. Read more

M

Market-wide half-hourly settlement (MHHS)

The industry programme moving all electricity meters in Great Britain to half-hourly settlement. Read more

Meter serial number

The number identifying the physical meter. It changes if the meter is replaced, unlike the MPAN or MPRN. Read more

Microbusiness

A small business with extra protections under Ofgem rules, defined by energy use or by staff and turnover. Read more

MPAN

Meter Point Administration Number: the number identifying an electricity supply point in Great Britain. Read more

MPRN

Meter Point Reference Number: the number identifying a gas supply point in Great Britain. Read more

N

Non-commodity costs

The parts of a bill that aren’t the energy itself, such as network charges, balancing costs and policy costs. Read more

Notice period

The time some contracts require you to give before leaving at the end of the term. Suppliers can’t require microbusinesses to give notice of intent to switch. Read more

O

Ofgem

The energy regulator for Great Britain.

Out-of-contract rates

The rates charged when a fixed contract ends and no new one is agreed. Usually higher than contract rates. Read more

P

Pass-through

A contract cost charged at whatever it turns out to be, rather than fixed. Read more

Peak demand

The highest rate of electricity use at a site, usually measured in kW or kVA. Read more

Power factor

A measure of how efficiently a site uses electricity. A poor power factor can lead to reactive power charges. Read more

Principal terms

The key terms a supplier must give a business before a contract is agreed, including price, term and any broker fees. Read more

Profile class

A code historically used to describe how a non-half-hourly electricity supply is settled. Being phased out under MHHS. Read more

R

Reactive power charge

A charge on some larger supplies for reactive power, linked to a poor power factor. Read more

Redress scheme

An independent dispute-resolution scheme. Suppliers should only work with brokers in one for micro and small business contracts. Read more

Renewal letter

The information a supplier sends before a contract ends, setting out renewal options. Read more

Risk strategy

The rules for flexible purchasing: how much to buy, when, at what target price, and what triggers further buying. Read more

Rollover contract

A contract that renews automatically onto new terms if you don’t act. Restricted for microbusinesses. Read more

S

Smart meter

A meter that sends readings automatically and records detailed consumption data.

Standing charge

A fixed daily charge for each supply point, paid regardless of use. Read more

Supply capacity

The maximum load a supply is agreed to provide, measured in kVA for larger supplies. Read more

T

Termination fee

A charge for leaving a fixed contract before the end of its term. Read more

Time-of-use

Pricing that varies by time of day, such as day and night rates or network time bands. Read more

TNUoS charges

Transmission Network Use of System charges: the cost of using the national high-voltage electricity network. Read more

Tranche

A portion of energy volume bought at a particular time under flexible purchasing. Read more

U

Unit rate

The price per kWh of energy used, shown in pence. Read more

V

Volume correction factor

A figure (usually 1.02264) used to adjust measured gas volume for temperature and pressure. Read more

Volume tolerance

Limits in some contracts on how far your consumption can vary before extra charges apply. Read more

W

Wholesale price

The price suppliers pay for energy in the market before network, policy and supplier costs are added. Read more

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