Why is your business electricity bill so high?

The answer is on the bill, and on a business bill it is usually one of five things: a demand charge that reset on one bad afternoon, a contract that rolled over onto ongoing rates, usage that moved into a peak window, a network increase your retailer passed through, or a bill that simply covers more days than the last one. None of those show up as a bigger usage number, which is why the bill looks wrong.

That is also why the household advice does not help here. A business bill has lines a home bill does not, and the ones that move hardest are the ones priced in kilowatts rather than kilowatt hours. Below are the causes, roughly in the order they turn out to be the culprit, and what each one looks like on the page in front of you.

1. Your demand charge reset, and your usage had nothing to do with it

This is the one that produces the phone call. Your kilowatt hours went down, your bill went up, and nothing you did on the floor explains it.

A demand charge bills the highest rate at which you drew electricity during the measured window, in kilowatts, not the quantity you used. So a quiet month in which everything switched on at once one morning can carry a higher demand charge than a busy month that was evenly spread. Worse, many tariffs charge on the highest peak recorded over the previous twelve months rather than the current period, which means one unusual afternoon can sit on every bill for a year until it rolls off.

Check the demand line against the same line on your last few bills. If the peak figure moved and your usage did not, you have found it. Demand charges explained covers how the charge is calculated and how to bring a peak down without using less electricity.

2. Your contract ended and you rolled onto ongoing rates

Business energy contracts run for a term. When the term ends you do not get disconnected and you do not usually get a phone call. You roll onto whatever the plan's ongoing rates are, or onto a standing offer, and the first sign is a bill.

If you signed up one, two or three years ago and the bill has moved without anything at the site changing, look at the rates table rather than the total. Compare the cents per kilowatt hour and the daily supply charge against an older bill. A rollover shows up there before it shows up anywhere else.

3. Your usage moved into the peak window

On a time of use tariff the same kilowatt hour costs different amounts depending on when you used it. Extend your trading hours into the evening, add a shift, start prepping earlier, or move a production run, and the split between peak and off peak changes even when the total does not.

The bill prints the kilowatt hours in each window. Put this bill beside one from before the change and compare the peak line specifically. Networks also revise their window definitions from time to time, so the window can move without you moving anything.

4. A capacity charge, which does not respond to what you do

A capacity charge prices the capacity your connection is contracted to deliver, whether or not you draw it. Unlike a demand charge, it does not fall because you staggered your equipment, because it was never measuring your equipment.

If your bill carries one, the lever is the contracted capacity itself, which is a conversation with your distributor about the connection. That conversation is worth having if the site has shed load since the connection was sized, for instance if you replaced plant with something smaller or gave up part of the premises.

5. The season changed the rate and the window, not just the weather

Most demand tariffs publish a higher summer rate, a longer summer window, or both, because networks are sized for their hottest day. So a summer bill can be higher on the same load, on the same tariff, purely because of the dates it covers.

The season boundaries are set per network and stated as dates in the tariff, and they do not all agree. A billing period that straddles a boundary can show two demand lines. This is also why comparing a summer bill against a winter one tells you very little about your equipment.

6. Network charges went up, and your retailer passed them through

On many business bills the distributor's charges are itemised separately rather than folded into the usage rate. Those charges are set by your network, not by your retailer, and they are revised annually.

The practical consequence is that a bill can rise without your retailer changing a single rate it controls. It also bounds what switching can do for you: the retail component is what a switch changes, so a site whose bill is mostly network and demand has less available to it than a site whose bill is mostly usage. That is not a reason to skip the comparison, it is a reason to know what the comparison is worth before you run it.

7. A conditional discount lapsed

Plenty of business plans carry a discount that only applies if you pay by the due date or by direct debit. Miss it once and the discount vanishes for that bill, and the headline rate never moved.

If your bill shows two amounts, that is what you are looking at. Treat the gap as a bet on your own accounts payable rather than as money already saved.

8. The bill covers more days than the last one

Billing periods are not all the same length. A bill covering 95 days against one covering 88 is 8 per cent more bill on identical trading, before anything else has happened.

Divide the total by the days covered and compare that figure across bills instead of comparing totals. It is the single fastest way to rule this in or out, and it rules it out more often than people expect.

9. The meter read was estimated

Look for the word estimated, or an E, beside the read. An estimate means nobody read the meter and the retailer projected from history. A high estimate produces a high bill now, and a low one produces a catch up bill later that looks like a spike.

Two estimates in a row is worth querying properly. Interval metered sites should not see this, which is itself a clue about what kind of meter you have.

10. Something at the site genuinely changed

New equipment, a second fridge, a longer trading day, a tenant sharing the meter, a faulty thermostat holding a compressor on. Usage creep is real and invisible until the bill arrives.

Your bill's daily average usage figure, compared against the same quarter last year, is where this shows up. If your usage is genuinely up, no plan switch fixes that part. It does make being on the right plan matter more rather than less, because you are now buying more of whatever you are buying.

What we read when you upload a business bill

From the billing details: the period and the days covered, the NMI, the meter number and whether the read was actual or estimated.

From the usage section: total kilowatt hours, the split across peak, shoulder and off peak if you are on time of use, the daily average, and any solar export.

From the demand section: the recorded peak in kW or kVA, the unit it is priced in, the rate, and the window or season it applies to.

From the rates section: usage rates in cents per kilowatt hour, the daily supply charge, itemised network charges, metering charges, and any discount with its conditions.

From the summary: the total, the GST line, and anything carried forward from the last bill. A carried balance is not a charge for this period, and reading it as one is the most common way a business concludes its bill jumped when it did not.

Stop guessing and read the bill

Everything above is diagnosis by category, which gets you to a shortlist. Your own bill is diagnosis by fact.

Upload your business bill and the engine reads the usage, the tariff structure, the rates, the supply charge and the demand line, then prices the plans published for your address against your own numbers and ranks them by projected annual cost with the workings shown. Costs are estimates built from your bill and retailers' published rates, not quotes.

If you are already on a competitive plan for your load shape, that is what it will tell you. A fair number of businesses are, and nobody should switch for the sake of switching. What changes is that you will know which one you are.

Go deeper

If the bill itself is the puzzle, how to read a business electricity bill walks every line in the order it appears. If the demand line is the problem, start with demand charges explained, and if that line is priced in kVA, kW vs kVA on a business electricity bill covers what the unit is doing to your charge.

If you are not sure whether your site counts as a small business customer at all, am I a small business energy customer has the thresholds by state. And business electricity plans is the head page for the comparison itself.