It is believed that more than half of businesses could be paying more than they should be for their energy – because they didn’t understand the complex jargon used by their energy supplier.
The world of energy supply and distribution is full of extensive, complex terminology, which is perhaps even more confusing if you run a business.
Not only is cutting your energy bills essential for looking after your bottom line, but saving energy is critical for controlling and improving your carbon footprint. Here are a few simple explanations of some terms and phrases that you’re likely to hear when managing energy for your business.
Confused about carbon?
In this age of corporate social responsibility, we hear a lot of talk about carbon footprints – that is, the measure of the amount of CO2 emitted by a person or an organisation.
Many organisations are striving towards carbon neutrality – operating in a way that doesn’t increase the net amount of CO2 in the atmosphere. It’s generally difficult to work in a way that is totally neutral however, as most operations will create emissions of greenhouse gases – gases which trap heat in the atmosphere and are believed to have led to our climate system being about 2°C above the pre-industrial global average temperature.
Some businesses explore carbon offsetting - investing in renewable energy, or an energy conservation project – perhaps voluntary – that will effectively negate the amount of CO2 emitted into the atmosphere. You can find information on the sorts of schemes available – however keep in mind that offsetting is not as effective as working towards carbon neutrality from the outset.
Struggling with standards?
The United Nations Framework Convention on Climate Change (UNFCCC or FCCC) is an international environmental treaty, created at the United Nations Conference on Environment and Development (UNCED) – also known as the Earth Summit in Rio de Janeiro, which took place in 1992. The treaty aimed to stabilise greenhouse gas emissions in the atmosphere.
A famous agreement made under the UNFCCC is the Kyoto Protocol - the result of negotiations in Japan in 1997. This sets binding greenhouse gas emissions targets for countries that took part in the agreement.
Businesses can help by adhering to standards introduced at the Rio summit. The ISO 14000 family of standards for businesses helps organisations to improve their environmental performance. Particularly relevant is the ISO 14064 standard which provides businesses with a framework of tools to monitor their greenhouse gas emissions.
Troubled with tax?
In 2001, the government imposed the Climate Charge Levy - a charge on UK business and non-domestic electricity and gas.
Rather than being another way to raise revenue from honest organisations, the levy was introduced to encourage businesses to aim for more efficient energy consumption, encourage them to consider energy from renewable sources, and reduce their greenhouse gas emissions.
All rates of CCL are charged at a specific rate per unit of energy. You may be able to claim exemption or discount from the CCL through PP10 / PP11 certification which must be completed and sent to HM Revenue & Customs and your energy supplier.
Baffled about bills?
Kilowatt hour? Out of contract? Deemed pricing? Standing charge? Not all businesses understand the different terms that may appear on their bills.
Energy suppliers are legally obliged to pay a fee to National Grid or the distributor that owns the wires and pipes that carry your energy. The standing charge on your bill helps to cover standard costs such as these. The standing charge is fixed – and is usually a fixed daily amount - no matter how much or how little your organisation has actually used.
Your unit rate represents the energy that you actually use, and is usually measured in pence per kilowatt hour (p/kWh) - equivalent to one kilowatt - or a thousand watts - running for one hour.
'Deemed' rates apply if you move to new premises. You don’t have a contract yet, so you’re deemed to be with the old supplier. They can be more expensive than normal. More expensive still are out-of-contract rates which you pay if you are not signed up to a supplier.
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