Clear, jargon-free definitions of essential business energy terms. From kWh to MPAN, understand exactly what's on your energy bill and what the 2024 TPI regulations mean for you.
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A kilowatt hour is the standard unit of measurement for energy consumption. It represents using 1,000 watts of power for one hour. Your business energy bill is typically calculated by multiplying your kWh usage by your unit rate (pence per kWh).
Example:
If you run a 2kW heater for 5 hours, you've consumed 10 kWh of energy.
A fixed daily fee charged by your energy supplier, regardless of how much energy you use. This covers the cost of maintaining your connection to the energy network and reading your meter. Charged in pence per day.
Example:
A standing charge of £0.50 per day equals £182.50 per year, even if you use zero energy.
The price you pay for each kilowatt hour (kWh) of energy you consume, typically shown in pence per kWh (p/kWh). This is the variable part of your bill that changes based on your usage.
Example:
At a unit rate of 24p/kWh, consuming 1,000 kWh costs £240.
A significantly higher default rate charged when your fixed-term contract ends and you haven't switched to a new deal. Also called 'out-of-contract rates', these can be 30-50% more expensive than standard fixed rates.
Example:
Your contract rate was 22p/kWh, but after it ended you rolled onto deemed rates of 34p/kWh.
Additional costs that suppliers pass directly to business customers without markup, including network charges (DUoS/TNUoS), environmental levies, and government schemes. These appear as separate line items on business energy bills.
Example:
Your bill shows £45 for DUoS charges and £23 for environmental levies as pass-through costs.
An automated payment method where your energy supplier collects payment directly from your bank account on a set date each month. Reduces the supplier's risk of late or missed payments, often resulting in lower deposit requirements or better contract terms. Most suppliers prefer Direct Debit over invoice payment.
Example:
By setting up a Direct Debit, your supplier may waive a £3,000 security deposit requirement because they have guaranteed monthly payment collection.
A unique 13 or 21-digit reference number that identifies your electricity supply point. Essential for switching suppliers and managing your electricity connection. Found on your electricity bill.
Example:
A 13-digit MPAN might look like: 1234 5678 9012 3
A unique 6 to 10-digit reference number that identifies your gas supply point. Used for switching gas suppliers and managing your gas connection. Found on your gas bill.
Example:
An MPRN might look like: 1234567890
A digital meter that automatically sends your energy usage readings to your supplier in near real-time, eliminating the need for manual meter readings. Provides half-hourly data for business electricity customers.
Example:
With a smart meter, your supplier receives your usage data every 30 minutes automatically.
Advanced metering that records electricity consumption in 30-minute intervals throughout the day. Mandatory for businesses using over 100kW (typically annual consumption over 250,000 kWh). Allows for time-of-use pricing.
Example:
Your HH data shows you used 15 kWh between 9:00-9:30am and 8 kWh between 9:30-10:00am.
Standard metering for smaller business customers (typically under 100kW demand). Energy consumption is estimated using industry-standard profiles until actual readings are taken. Being phased out by Market-Wide Half-Hourly Settlement (MHHS) by 2026.
Example:
Your NHH meter is read quarterly, with estimated bills in between.
A classification system used to categorise electricity meters based on the customer's typical usage patterns. Identified by the first two digits of your MPAN. Profile Class 03 is standard non-domestic (single rate), Class 04 is non-domestic Economy 7 (day/night rates), and Class 00 is half-hourly metered (typically large users over 100kW). Your Profile Class determines how your supplier estimates and settles your usage.
Example:
Your MPAN starts with '03', meaning you're on Profile Class 03 - a standard non-domestic meter with estimated billing.
The two generations of smart meter technology in the UK. SMETS1 (Smart Metering Equipment Technical Specifications 1) were early smart meters that sometimes lost connectivity when you switched supplier. SMETS2 meters are the current standard with improved interoperability - they communicate via the DCC network and remain 'smart' regardless of which supplier you use. Most SMETS1 meters are now being upgraded remotely to work like SMETS2.
Example:
Your old SMETS1 meter went 'dumb' when you switched from British Gas to EDF. The DCC is now remotely upgrading it so it works properly again.
The pattern of your electricity usage over time, typically shown as a graph of consumption across each half-hour of the day. Your load shape determines whether you're a 'peaky' user (high consumption at expensive peak times like 4-7 PM) or a 'flat' user (consistent usage throughout the day). Under MHHS, your load shape directly affects your costs.
Example:
A restaurant has a 'peaky' load shape with low usage until 4 PM, then high consumption during dinner service until 10 PM.
The organisation responsible for operating the Balancing and Settlement Code (BSC) in the UK electricity market. Elexon manages the systems that calculate how much energy each supplier has bought and sold, and is the delivery body for the Market-wide Half-Hourly Settlement (MHHS) programme.
Example:
Elexon's systems will process your half-hourly smart meter data to settle your electricity account under MHHS.
An electricity tariff structure where unit rates vary depending on when you use power. Typically cheaper during off-peak hours (overnight, weekends) and more expensive during peak demand (4-7 PM on weekdays). MHHS enables more sophisticated ToU pricing by providing accurate half-hourly consumption data.
Example:
On a ToU tariff, you pay 15p/kWh for electricity used at 3 AM but 35p/kWh for electricity used at 6 PM.
The process of calculating how much energy each supplier has bought and sold, and reconciling payments between market participants. Currently, most SMEs are settled using estimated 'profiles'. Under MHHS, all meters will be settled on actual half-hourly data, meaning suppliers pay for exactly what their customers used, when they used it.
Example:
Under the old settlement system, your supplier assumed you used power evenly throughout the day. Under MHHS, they'll see you actually use 80% of your power between 5-8 PM.
An energy contract with a set unit rate and standing charge that remains unchanged for a specific period (typically 1-5 years). Protects you from wholesale price increases but often includes early termination charges if you leave before the end date.
Example:
A 3-year fixed contract at 23p/kWh means your rate stays at 23p/kWh for the entire 3 years.
An energy contract where your rates can change periodically based on wholesale market prices. Offers potential savings when prices fall but exposes you to price increases. Also called 'variable' or 'tracker' contracts.
Example:
Your flexible contract rate dropped from 24p/kWh to 21p/kWh this quarter as wholesale prices fell.
A charge imposed by your supplier if you end your fixed-term contract before the agreed end date. Typically calculated per meter or as a percentage of remaining contract value. Can be several hundred to thousands of pounds.
Example:
Leaving your 3-year contract 1 year early costs £500 per meter in termination fees.
The period after you request a switch during which your current supplier can object to the transfer if there are valid reasons, such as outstanding debt or contract disputes. Typically 10-15 working days for electricity and 15-20 working days for gas. If no objection is raised, the switch proceeds automatically.
Example:
Your electricity switch was requested on April 1st; your current supplier has until approximately April 17th (10-15 working days) to object.
A document you sign authorising a new supplier or broker to act on your behalf to switch your energy supply. Essential for business energy switching. Meet George's LOA simply authorises us to complete your switch - you're never locked in. However, some traditional brokers use LOAs that tie you into long-term brokerage agreements, so always read carefully before signing.
Example:
You sign Meet George's LOA allowing us to switch your energy supply to a cheaper supplier. You can cancel at any time with no penalties.
A Letter of Authority that only grants a broker permission to access your meter data and fetch energy quotes on your behalf. Crucially, a Level 1 LOA does NOT give the broker 'Signing Authority' - they cannot sign contracts, renew agreements, or make changes to your supply without your explicit written consent for each transaction. This is the safer option when working with brokers.
Example:
With a Level 1 LOA, your broker can show you quotes from 10 suppliers, but you must personally approve and sign the final contract.
A Letter of Authority that grants a broker 'Signing Authority' to act on your behalf, including signing new contracts or renewals without showing you the terms first. This is high-risk for businesses as brokers can legally commit you to multi-year contracts with embedded commissions. Many SMEs sign Level 2 LOAs unknowingly and discover years later that their broker renewed them onto expensive rates.
Example:
Your broker used their Level 2 LOA to sign a 3-year renewal on your behalf at 28p/kWh, including a hidden 4p/kWh commission, without ever showing you the contract.
The specific period before your energy contract ends during which you can negotiate a new deal or switch suppliers. Typically 60-120 days before the contract end date. Missing this window may result in automatic renewal, being locked in for another term, or rolling onto expensive deemed rates. Suppliers are required to notify Microbusinesses about their renewal window.
Example:
Your contract ends on 1st March. Your renewal window opens on 1st November (120 days before), giving you 4 months to compare quotes and switch.
A contract clause that automatically extends your energy agreement for another fixed term (often 12-24 months) unless you actively opt out or switch before the renewal window closes. For Microbusinesses, Ofgem rules now prevent suppliers from auto-renewing onto another long fixed term without express consent - but brokers with Level 2 LOAs can still trigger renewals on your behalf.
Example:
You forgot to review your contract before the window closed, and the auto-renewal clause locked you into another 2 years at the same rate plus a new broker commission.
A contract clause (also called 'Take or Pay') that penalises you if your actual energy usage varies significantly from your Estimated Annual Consumption (EAC). Most contracts set a tolerance band of 80-120%. Using more than 120% of your forecast means the supplier must buy extra energy at expensive spot prices, passing the cost to you. Using less than 80% means you pay for 'unused' energy the supplier already purchased. Profile Class 00 (half-hourly) meters face stricter enforcement than smaller SME accounts.
Example:
Your EAC is 100,000 kWh with an 80/120 tolerance band. If you only use 70,000 kWh, you may be charged for the 10,000 kWh shortfall (the gap between 70k and the 80k minimum).
A small business that qualifies for enhanced consumer-style protections under Ofgem regulations. To qualify, a business must meet at least one of these criteria: fewer than 10 employees, annual turnover or balance sheet under €2 million, or annual energy consumption under 100,000 kWh (electricity) or 293,000 kWh (gas). Microbusinesses receive clearer contract terms, protection from unfair practices, and access to the Energy Ombudsman for disputes.
Example:
A coffee shop with 4 employees using 25,000 kWh per year qualifies as a Microbusiness and can complain to the Energy Ombudsman if treated unfairly.
The Office of Gas and Electricity Markets - the UK's independent energy regulator. Protects consumers by setting rules for energy suppliers, managing licences, and enforcing market standards. Does not set energy prices directly.
Example:
Ofgem introduced the energy price cap for domestic customers in 2019 and TPI transparency rules for business energy in 2024.
The price energy suppliers pay to purchase gas and electricity from generators and traders on the wholesale market before selling it to consumers. Fluctuates based on supply, demand, weather, and geopolitical factors. Major component of your energy bill.
Example:
When wholesale gas prices spiked in 2022, business energy rates increased significantly.
A major regulatory programme requiring all UK electricity meters to be settled based on actual half-hourly consumption data rather than estimated profiles. Migration opened October 2025 with mass rollout from April 2026. Delivered by Elexon under Ofgem direction. Creates 'winners' (off-peak users) and 'losers' (peak-time users) as pricing shifts from averages to actuals. By January 2027, businesses without smart meters may be blocked from fixed-rate contracts.
Example:
Under MHHS, a bakery starting at 4 AM pays less than a restaurant firing up ovens at 6 PM - even if both use the same total kWh.
The company responsible for operating and maintaining the local electricity distribution network in your area. There are 14 DNO regions across Great Britain, owned by six different groups. Your DNO delivers electricity from the National Grid to your premises and charges DUoS fees for this service.
Example:
UK Power Networks is the DNO for London and the South East; Scottish Power Energy Networks covers central and southern Scotland.
Fees charged by your local distribution network operator (DNO) for transporting electricity through the local network to your premises. Based on your consumption and demand. Passed through to you by your supplier.
Example:
Your bill shows £78 in DUoS charges for using the local electricity network this month.
Fees for using the national high-voltage electricity transmission network to transport power across the UK. Charged to larger business users (typically HH metered). Varies by location and time of use.
Example:
Northern businesses often pay lower TNUoS charges than those in the South due to proximity to generation.
A financial incentive for businesses to be flexible with their energy usage. The National Grid pays businesses to reduce consumption, switch to alternative power sources, or export stored energy during peak demand periods. Thanks to 2025 regulatory changes (P415), SMEs can now participate through aggregation without needing the previous 1MW minimum load requirement.
Example:
A restaurant chain earns £8,000 annually by agreeing to reduce their HVAC usage during the 5pm-6pm peak period when the Grid requests it.
A UK government scheme that pays businesses a retainer fee for being available to reduce electricity consumption during 'Stress Events' when grid demand exceeds supply. Contracts typically pay £20-£50 per kW per year. The 2025 Electricity Capacity (Amendment) Regulations introduced 3-year agreements for 'unproven DSR' with low entry thresholds to encourage SME participation.
Example:
Your business has 50kW of flexible load. At £30/kW/year, you earn £1,500 annually just for being available to reduce consumption if called upon (which is rare).
A National Grid scheme that pays businesses and households to reduce electricity usage during specific peak hours, typically 5pm-6pm on winter evenings. Originally a winter trial, it is evolving into a year-round service. In 2023/24, participants earned £3-£6 per kWh reduced.
Example:
During a cold snap, the Grid calls a DFS event for 5-6pm. Your business reduces consumption by 20 kWh during that hour and earns £80 at the £4/kWh rate.
A third-party provider that bundles the flexible load of hundreds of small businesses together to create a 'virtual power plant' large enough to participate in wholesale flexibility markets. Aggregators handle the complexity of market bidding, baseline calculations, and compliance so individual businesses can simply receive revenue cheques.
Example:
An aggregator combines your 30kW of flexible load with 300 other businesses to create a 10MW portfolio that can bid into the Capacity Market.
The process of combining the flexible energy capacity of multiple smaller businesses to meet the minimum thresholds required to participate in wholesale flexibility markets. Before aggregation rules were relaxed, businesses needed at least 1MW of flexible load to participate in most programmes, excluding 80% of UK businesses.
Example:
Through aggregation, a group of 50 pubs each with 20kW of flexible load can participate in the Capacity Market as a combined 1MW asset.
The real-time market used by the National Grid to balance electricity supply and demand second-by-second. Until the P415 regulatory change in 2025, only licensed energy suppliers could access this lucrative market. Now independent aggregators can participate directly, meaning businesses can separate their energy supply from their flexibility provider.
Example:
Your aggregator bids your battery storage into the Balancing Mechanism, earning premium rates for exporting power during unexpected demand spikes.
A certificate proving that electricity was generated from renewable sources. One REGO is issued per MWh of renewable generation. Historically, suppliers absorbed REGOs for free when businesses exported solar or wind power, but platforms like Soldera.org now allow smaller generators to sell these certificates separately, creating an additional revenue stream.
Example:
Your rooftop solar generates 50 MWh annually. Instead of giving your supplier the REGOs for free, you sell them separately for an extra £150-£250 per year.
Technology that allows electric vehicles to export stored energy back to the electricity grid during peak demand periods. V2G-enabled EV chargers turn your vehicle fleet into a mobile battery asset that can earn revenue through Demand Side Response programmes. Requires bidirectional charging equipment and compatible vehicles.
Example:
Your delivery company's 10 EVs sit idle from 4pm-7pm. With V2G chargers, they export power during the evening peak and earn £200/month in flexibility payments.
The practice of earning from multiple flexibility programmes simultaneously. 2025 rules allow businesses to participate in the Capacity Market, Demand Flexibility Service, wholesale arbitrage, and REGO trading at the same time, maximising the value of their flexible assets. Requires careful declaration to avoid double-counting penalties.
Example:
Your battery storage earns from three sources: £1,200/year Capacity Market retainer, £3,000/year from DFS events, and £800/year from arbitrage - totalling £5,000 from a single asset.
A British Standard ensuring 'Smart Appliances' like EV chargers, HVAC systems, and battery storage are interoperable and can communicate with any aggregator or flexibility provider. DESNZ has consulted on making this mandatory. Equipment that isn't PAS1878 compliant may trap you in a 'walled garden' unable to switch aggregators or access the best flexibility rates.
Example:
Before buying an EV charger, you ask: 'Is this PAS1878 compliant?' The supplier confirms it is, meaning you can switch aggregators freely in future.
An intermediary who helps businesses compare and switch energy suppliers in exchange for commission. Since 2024, Ofgem requires all brokers to disclose their commission clearly in your energy contract. Quality and transparency vary significantly between brokers.
Example:
Your broker found you a quote at 24p/kWh, and your contract shows they're taking 3p/kWh commission, meaning the actual supplier rate is 21p/kWh.
The payment a broker receives for arranging your energy contract. As of 2024, Ofgem regulations require all broker commission to be clearly disclosed in your energy supply contract. This can be shown as pence per kWh or a total amount. Ranges from 1-8p/kWh for business energy. Meet George charges a transparent 1p/kWh commission.
Example:
Your energy contract states: 'Third-party intermediary commission: 2.5p/kWh over the contract term'.
The regulatory term for any company that acts between you and your energy supplier, including brokers, consultants, and switching platforms. Ofgem introduced TPI transparency regulations in 2024 requiring commission disclosure in all business energy contracts.
Example:
As a TPI, Meet George must follow Ofgem's transparency rules and ensure our 1p/kWh commission is clearly shown in your supplier contract.
Industry standards and regulations governing how Third-Party Intermediaries must behave when helping businesses switch energy suppliers. Key requirements include clear commission disclosure (mandatory from 2024), fair treatment of customers, and professional conduct standards enforced by Ofgem.
Example:
Under the TPI Code of Practice, your broker must show their commission amount in your energy contract before you sign.
A now-regulated practice where broker commission was invisibly built into energy rates rather than shown separately. From 2024, Ofgem requires all commission to be disclosed in the supply contract, ending this opaque practice. However, the commission is still typically added to the supplier's wholesale cost rather than charged separately.
Example:
Before 2024: Your quote showed 25p/kWh total with no commission breakdown. After 2024: Your contract must state the supplier rate and broker commission separately (e.g., 22p/kWh supplier rate + 3p/kWh broker commission).
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