How to Understand Your Industrial Electricity Bill

Understanding Your UK Industrial Electricity Bill – Where the Money Really Goes

If you run an industrial site in the UK, your electricity bill is more than just a unit price. It’s a complex mix of charges that can significantly impact your bottom line. Knowing what makes up the bill—and where you can take control—is the first step to cutting costs.

Breaking Down the Bill

1. Unit Cost (kWh)
   This is the price you pay for each kilowatt-hour of electricity consumed. It’s the most visible part of the bill—and often the biggest opportunity for savings. Even a small reduction in unit cost can translate into thousands of pounds annually.

2. Availability Charges (kVA)
   Your supplier reserves capacity for your site based on your agreed maximum demand, measured in kilovolt-amperes (kVA).

   • If your actual demand exceeds this, you’ll pay penalties.
   • If you’ve overestimated, you’re paying for capacity you don’t use.
     Tip: Review your agreed capacity regularly and align it with actual usage.

3. Maximum Demand Charges
   These charges reflect the highest level of power you draw during a billing period. A single spike can increase costs for months.
   Solution: Implement load management strategies to avoid peaks.

4. Management Fees
   Historically, some brokers and intermediaries added excessive management fees to bills. OFGEM has cracked down on this practice, introducing transparency rules to protect businesses from hidden costs.
   Action: Check your contract—make sure fees are clear and competitive.

Where Are the Biggest Savings?

While availability and demand charges matter, one of the most impactful cost-saving strategies is negotiating a better unit rate. Why?

• Unit cost applies to every kWh you consume.
• A 1p reduction per kWh can save £10,000 per year for a site using 1 million kWh.

Insight: Why Energy Efficiency Alone Isn’t Enough

Reducing consumption is vital—but if your unit cost is high, you’re still leaving money on the table. Combine efficiency measures (like sub-metering and power factor correction) with smart procurement for maximum impact.

Pro Tip: Know Your Load Profile

Understanding when and how you use energy helps you:

• Avoid peak demand penalties.
• Negotiate contracts that match your usage pattern.
• Identify opportunities for on-site generation or demand-side response.

Ready to Cut Your Energy Costs?

Contact InduConserv for:

• Bill audits to uncover hidden charges.
• Strategies to optimize availability and demand.
• Procurement support to secure the best unit rates.