Business energy uses a lot of jargon, and most of the costly mistakes hide in it: a "deemed" rate, a missed notice date, or broker commission built into the unit rate. This glossary explains each term in plain English and says what to check. Terms are grouped by where you'll meet them.
This is general information, not legal or financial advice. Rules and figures are as of 24 October 2026.
What do the terms on a business energy bill mean?
| Term | What it means | What to check |
|---|---|---|
| kWh | A kilowatt hour, the unit energy is sold in. A 1 kW heater running for one hour uses 1 kWh. | Your annual kWh. Every quote and protection threshold depends on it. |
| Unit rate | The price per kWh, in pence. | Compare quotes on the same annual kWh, not on unit rate alone. |
| Standing charge | A fixed daily charge for the supply, paid even if you use nothing. | Quotes with a low unit rate can hide a high standing charge. |
| MPAN | Your electricity supply number. A 21-digit number in a box on the bill; the last 13 digits are the unique "core". | Needed for accurate quotes. It isn't a password. |
| Profile class | The first two digits of the MPAN. 00 means a half-hourly meter; 03 and 04 are the usual small business classes. | It tells a supplier how your usage is measured. |
| MPRN | Your gas supply number. Shorter than the MPAN. | Needed for gas quotes. |
| Actual and estimated reads | "A" or "actual" means a real meter reading. "E" means the supplier guessed. | Several estimates in a row can lead to a big catch-up bill. Send readings. |
| Half-hourly (HH) meter | A meter that records use every 30 minutes, usual for larger sites. | HH sites often pay extra lines such as capacity charges. |
| Half-hourly settlement | Matching each site's use to its real cost in every 30-minute slot, instead of an estimated profile. All meters in Great Britain are due to move across by 7 May 2027. | Whether your price is fully fixed, and any time-of-use rates. See half-hourly settlement. |
| Capacity charge | A charge for the maximum power (kVA) your site has agreed it can draw, usually on HH sites. | If your agreed capacity is far above your real peak, ask about reducing it. |
| Network charges (DUoS, TNUoS) | The cost of using the local and national power networks. Often bundled into the unit rate; on larger sites shown separately. | "Pass-through" contracts can change these during the term. |
| Climate Change Levy (CCL) | A tax on business energy. From 1 April 2026 it's 0.801p per kWh for both electricity and gas. | Low-use and charity non-business supplies can be excluded. See the CCL and VAT guide. |
| VAT | Usually 20% on business energy. 5% if usage is under the de minimis limits or the supply qualifies as domestic or charity use. | See "de minimis" below. |
| De minimis | HMRC's small-use limits: up to 33 kWh a day or 1,000 kWh a month of electricity, and 145 kWh a day or 4,397 kWh a month of gas. Under these, supplies get reduced-rate VAT and are outside CCL. | Divide your bill's kWh by the months it covers. |
| Temporary 0% VAT | From 1 October 2026 to 31 March 2027, qualifying electricity in Great Britain (including business supplies under the de minimis limit) has 0% VAT. Northern Ireland stays at 5%. Gas stays at 5%. | Check your first bill after 1 October 2026. |
For a line-by-line walk-through with worked sums, see how to read a business energy bill.
What do the contract terms mean?
| Term | What it means | What to check |
|---|---|---|
| Fixed contract | The unit rate and standing charge stay the same for the contract length. | Pass-through costs can still change unless the contract says they're fixed. |
| Variable contract | Prices can rise or fall during the contract, often tracking wholesale prices. | How much notice the supplier gives before a price change. |
| Flexible contract | Usually for large businesses. Energy is bought in portions over time. | Who decides when to buy, and the fees for doing it. |
| Deemed contract / deemed rate | What you pay if you use energy without agreeing a contract, for example after moving into premises or if your supplier fails. Usually higher than contract rates. | Agree a contract straight away. See deemed and out-of-contract rates. |
| Out-of-contract rate | What you pay when a fixed term ends and you haven't agreed a new deal. Usually higher than fixed rates. | Your contract end date, which microbusiness bills must show. |
| Rollover / evergreen | A contract that renews automatically at the end of its term, usually for 12 months and often at a higher rate. | The notice date. Diary it. |
| Notice period | How long before the end date you must tell the supplier you're leaving. For microbusinesses on evergreen contracts, Ofgem caps it at 30 days. | Use our contract notice calculator. |
| Termination acknowledgement | For microbusinesses on evergreen contracts, the supplier must acknowledge your notice within 5 working days. | Ask for written confirmation. |
| Principal terms | The key terms: rates, standing charges, length, end date, notice and fees. For a microbusiness, these must be sent in writing, within one working day if you agreed by phone. | Check they match what you were told. |
| Verbal contract | A contract agreed on a call. It's normally binding. | See contracts agreed over the phone. |
| Cooling-off period | There isn't one for business energy contracts. | Do your checks before you agree, not after. |
| Exit fee / termination fee | A charge for leaving a fixed contract early. | The fee in pounds before you sign. |
| Objection to switch | A supplier can block your switch, for example if you owe money. | Ask why in writing. See business energy debt. |
| Security deposit | Money a supplier may ask for before supplying, often after a credit check. | How and when it's returned. |
What do the rules and protections mean?
| Term | What it means |
|---|---|
| Microbusiness | Ofgem's protected group. Fewer than 10 employees and turnover or balance sheet up to £2 million, or up to 100,000 kWh of electricity a year, or up to 293,000 kWh of gas. See are you a microbusiness? |
| Small business | For Ofgem's newer protections: up to 200,000 kWh of electricity or 500,000 kWh of gas a year, or fewer than 50 staff with turnover up to £6.5 million (or balance sheet up to £5 million). |
| Back-billing | Billing for energy used in the past. Suppliers can't back-bill a microbusiness for energy used more than 12 months before the bill, unless the business stopped accurate billing. See business energy back-billing. |
| Standards of Conduct | Ofgem's rules that suppliers treat business customers fairly. Since 1 July 2024 they apply to businesses of any size, not just microbusinesses. |
| Deadlock letter | A supplier's or broker's written final answer to a complaint. It lets you go to the Energy Ombudsman early. |
| 8-week rule | If your complaint isn't resolved after 8 weeks, you can take it to the Energy Ombudsman even without a deadlock letter. The government decided in June 2026 to cut this to 6 weeks; no start date yet. |
| Communal supply | Energy for the shared parts of a block of flats (lighting, lifts, door entry). It's a business contract held by the landlord or managing agent, so the household price cap doesn't apply. Residents aren't liable for the debt. See communal areas in blocks of flats. |
| Energy Ombudsman | The free dispute service. Since 19 December 2024 it covers small businesses as well as microbusinesses. See bill disputes. |
What do broker terms mean?
| Term | What it means | What to check |
|---|---|---|
| Broker / TPI | A third-party intermediary: a broker, consultant or price comparison service that arranges energy contracts. | Who it works for, and how it's paid. |
| Commission / uplift | Most brokers are paid by the supplier, through a few pence per kWh added to your unit rate. | The total commission in pounds over the contract. |
| Fee disclosure | For contracts signed on or after 1 October 2024, suppliers must clearly show any broker fees in the contract, for businesses of any size, and give the figure on request. | Ask for it in writing before you agree. |
| Redress scheme | A dispute scheme the broker belongs to. If a supplier pays the broker, the broker must be in an approved scheme. | Check the Energy Ombudsman register. |
| TPI regulation | The government has decided Ofgem will regulate brokers, but the law isn't in force yet. | See how to check a broker. |
| Letter of Authority (LOA) | A form you sign letting a broker get your usage data and quotes from suppliers. | Read what it allows and when it ends before you sign. |
How do the terms fit together? A worked example
A café uses 15,000 kWh of electricity a year. DESNZ's latest average for the smallest users (Q2 2026) is about 38.4p per kWh, including CCL but before VAT, with standing charges built in. That's about £5,750 a year before VAT.
Suppose a broker quote has a unit rate with 2p per kWh of commission in it. Over a 3-year contract that's 15,000 × 3 × 2p = £900 in commission. The quote should tell you this. If it rolls into an out-of-contract rate 10p per kWh higher for six months, that's about £750 extra. Check the end date, the notice date and the total broker fee before you sign.
Check your own figures with our free estimator. It's an estimate, not a quote, and BusinessEnergy.ai isn't a broker.
What to do next
- Find your MPAN, MPRN and annual kWh on your latest bills.
- Check your VAT rate and CCL line against the de minimis limits.
- Find your contract end date and notice date, and put both in your diary. See the business energy deadlines guide.
- If you use a broker, ask for the total fee in pounds, in writing.
- Check whether you're a microbusiness or small business, so you know your rights.
- Keep complaints in writing, and note the date you started. After 8 weeks you can go to the Ombudsman.
- Sense-check any quote with the estimator.