Short answer
A business gas contract sets your unit rate per kWh, a daily standing charge and the contract term. Your meter measures gas by volume, and your bill converts that to kWh before charging you.
Key takeaways
- Gas is measured by volume and converted to kWh on your bill.
- Check whether your meter is metric or imperial; a mix-up is a common billing error.
- Suppliers price on annual quantity (AQ), so send regular readings.
What you pay for
| Charge | What it is |
|---|---|
| Unit rate | Pence per kWh of gas used |
| Standing charge | Fixed daily amount for the supply point |
| Climate Change Levy | Charged on business gas unless your use is low enough to be exempt |
| VAT | Usually 20%; 5% if average use is no more than 145 kWh a day |
How gas is turned into kWh
Gas meters measure volume, either in cubic metres (metric meters) or hundreds of cubic feet (imperial meters). Your supplier converts that volume into energy:
- Imperial readings are first converted to cubic metres (100 cubic feet is about 2.83 cubic metres).
- The volume is multiplied by a correction factor for temperature and pressure (1.02264 for most sites).
- It is then multiplied by the calorific value, the energy content of the gas, usually around 39 to 40 MJ per cubic metre.
- Finally it is divided by 3.6 to convert megajoules into kWh.
All of this appears on your bill. If your bill shows a much higher kWh figure than you expect, check whether the meter is imperial or metric. A mix-up between the two is a common cause of billing errors.
Annual quantity (AQ)
Each gas supply point has an annual quantity, an industry estimate of how much gas it uses in a year. It is recalculated regularly from meter readings. Suppliers use the AQ to price your contract, so an out-of-date AQ can affect the price you are offered. Submitting regular meter readings keeps it accurate.
Seasonality
For most businesses gas use is dominated by heating and hot water, so winter bills can be several times higher than summer ones. Suppliers price on your annual consumption, so judge a contract on the yearly cost, not one month's bill.
Gas and electricity together
Many suppliers offer both fuels. They are usually separate contracts with separate end dates, even with the same supplier. Aligning them can make renewals easier, but it isn't always the cheapest option.
Who looks after what
- Your supplier bills you and holds your contract.
- The gas transporter owns and maintains the pipes.
- In an emergency, if you smell gas, call the National Gas Emergency number on 0800 111 999, not your supplier.
Worked example: converting a reading
A metric meter records 1,000 cubic metres in a quarter. With a correction factor of 1.02264 and a calorific value of 39.5 MJ per cubic metre:
1,000 × 1.02264 × 39.5 ÷ 3.6 = about 11,221 kWh
Illustrative figures to show the maths, not real prices.
If that same reading were wrongly treated as imperial (hundreds of cubic feet), the kWh would be overstated by roughly 2.83 times. That's why it is worth checking the meter type shown on your bill.
Larger gas users
High-consumption sites, such as manufacturers using gas for process heat, may have daily-metered supplies and contracts with more complex pricing, including capacity-related charges. Flexible purchasing is also available for larger gas volumes. See fixed vs flexible.
Common mistakes
- Judging a contract on a single summer bill
- Letting the AQ drift out of date by not sending readings
- Forgetting the gas contract has a different end date from electricity
- Not checking for the 5% VAT rate on low-use supplies
Sources
- Ofgem: Energy advice for businesses (ofgem.gov.uk)
Questions
Why is my gas bill so much higher in winter?
Heating and hot water drive most business gas use, so consumption rises sharply in colder months.
What is the difference between an MPRN and a meter serial number?
The MPRN identifies the supply point and stays the same. The serial number identifies the physical meter, which can be replaced. See MPRN explained.
Can I switch gas and electricity at different times?
Yes. They are usually separate contracts and can be reviewed separately.
We introduce enquiries to an energy broker partner and may receive a fee. We're not a supplier and don't give whole-of-market advice. How we're paid
Your next energy contract deserves a closer look.
About two minutes. No obligation.