Glossary

Business energy jargon, decoded

179 terms you'll meet on bills, contracts and quotes, explained in plain English with links to the full guides.

A

AAHEDC (Assistance for Areas with High Electricity Distribution Costs): A small charge on electricity suppliers across Great Britain that helps keep distribution costs down in areas where they are high, such as the north of Scotland. It is passed through as a non-commodity cost, and Ofgem describes it as negligible compared with the other parts of a bill.
Agreed supply capacity: The maximum amount of electricity, measured in kVA, that your supply is allowed to draw at any one time. Going over it can trigger extra capacity charges, so it needs to match what your equipment actually needs. Read more
AMR (automated meter reading): A meter that sends readings to your supplier automatically, usually daily, instead of relying on estimates or manual readings. Many half-hourly and larger business meters use AMR. Read more
Annual quantity (AQ): An estimate, in kWh, of how much gas a supply point will use in a year under seasonal normal weather. It is calculated centrally from your meter readings and used to share out gas each day, validate new readings and set the transportation charges for your supply, so it is not the same as your actual usage and can differ from it.
Annualised advance (AA): An estimate of how much electricity a meter uses over a year, worked out from the readings taken between two actual meter reads. It is used in settlement and to estimate bills, and it replaces the earlier estimated annual consumption once there are real readings to work from.
Average business energy bill: A benchmark figure for what a typical business pays, based on its size and usage. It varies enormously by sector and meter type, so it is only useful for a rough comparison, not for judging your own bill. Read more

B

Back-billing: Being billed for energy used a long time ago, often because of a meter reading or billing error. Microbusinesses can only be back-billed for up to 12 months, except where the customer behaved in an obstructive or manifestly unreasonable way. Read more
Bad debt: Money owed by energy customers that is unlikely to be repaid. Ofgem notes that the cost of it is recouped through all customers' energy bills.
Balancing and Settlement Code (BSC): The rulebook for how electricity is balanced and paid for in Great Britain, covering the Balancing Mechanism and imbalance settlement. Elexon administers it, and all licensed generators and suppliers must sign up to it.
Balancing Mechanism: The main tool NESO uses to keep electricity supply and demand level in real time. Generators and other providers submit prices for changing how much they produce or use, and NESO accepts the lowest-cost options first. The cost of the system operator's balancing actions is recovered through BSUoS.
Baseload: The minimum, near-constant level of electricity demand on the system, and the wholesale contracts that supply power flat across every hour of the day. It is usually cheaper than peak power, which only covers the busiest hours. Read more
Broker commission: The payment an energy broker usually receives from the supplier you choose, rather than from you directly. The supplier may recover it through a fee linked to your consumption or a flat rate, and some brokers charge an upfront fee instead. A broker paid by a supplier must belong to an approved redress scheme. Read more
BSUoS (Balancing Services Use of System charge): A charge that covers the cost of keeping the electricity system balanced second by second, collected from suppliers and passed through as one of the non-commodity costs on your bill. Read more
BSUoS fixed tariff (CMP308 and CMP361): Since 1 April 2023, BSUoS has been charged only to demand customers and their suppliers, not to generators (CMP308), and through a fixed tariff set in advance rather than a variable charge worked out afterwards (CMP361). NESO publishes the fixed tariffs and monthly forecasts. Read more
Business battery storage: A battery system installed at a business premises to store electricity, often paired with solar panels or charged at cheap off-peak rates, then used or exported later to cut costs or reduce peak demand charges. Read more
Business energy contract: The agreement between a business and a supplier setting out the unit rate, standing charge, contract length and other terms for gas or electricity. Unlike domestic deals, there is no cooling-off period, even if agreed by phone. Read more
Business Energy Scotland: A free, Scottish Government-funded advice service that helps small and medium-sized organisations in Scotland cut their energy use and access funding for efficiency and renewable upgrades. Read more
Business rates versus energy bills: Business rates are a property tax based on a premises' rateable value, paid to the local council, and are entirely separate from your energy bill. Confusing the two is common for home-based businesses working out what they owe and to whom. Read more
Business Wales: The Welsh Government's main business support service, which signposts and administers grants, loans and advice for Welsh businesses, including schemes aimed at cutting energy costs. Read more

C

Calorific value: A measure of the energy content of the gas flowing through the network on a given day, used to convert the volume shown on a gas meter into kWh for billing. It changes slightly day to day and is published by the gas transporters. Read more
Capacity Market: A government scheme that pays electricity generators and some large consumers to guarantee they can supply or reduce demand when the system is under strain. Its cost is one of the non-commodity charges spread across business bills. Read more
Carbon offsetting: Paying to fund a project elsewhere, such as tree planting or renewable energy, that removes or avoids emissions, to compensate for emissions your business could not avoid directly. It does not reduce your actual energy use. Read more
Carbon Price Support (CPS): A rate of the Climate Change Levy charged on gas, LPG and solid fuels used to generate electricity, designed to encourage low-carbon generation. It is paid by the owners of power stations and operators of combined heat and power stations, not by energy customers directly. Read more
Cash-out: The charge a party pays when its energy position does not match what was actually delivered or used. Cash-out prices are set to give gas shippers and electricity suppliers a strong reason to balance their positions. In electricity the equivalent is the imbalance price.
CCA (Climate Change Agreement): An agreement between a qualifying energy-intensive sector and the Environment Agency that gives a large discount on the Climate Change Levy in exchange for meeting energy efficiency targets. Current holders get 92% off the electricity CCL rate and 89% off gas. Read more
CCL (Climate Change Levy): A tax added to most business gas and electricity bills, charged per kWh. From 1 April 2026 the main rate is 0.801p/kWh for both electricity and gas, rising to 0.827p/kWh from April 2027. Read more
CCL exclusions and small-use limits: Some supplies do not pay the main rate of the Climate Change Levy, including domestic use, a charity's non-business use and small quantities: electricity up to 1,000 kWh a month and piped gas up to 4,397 kWh a month at a premises. Where premises are used partly for qualifying use, the 60% rule decides whether the whole supply is relieved. Read more
CDCM (Common Distribution Charging Methodology): The set of rules distributors use to work out DUoS charges for low voltage and high voltage connections. The charges and the models behind them are published every year for each of the 14 distribution areas, and the methodology itself sits in the DCUSA.
CfD (Contract for Difference): A government scheme that pays low-carbon electricity generators a top-up when the wholesale price is below an agreed level, and claws money back when it is above. The scheme's net cost is passed through to suppliers and shows up as a non-commodity cost. Read more
Change of tenancy: The process of taking on or leaving an energy supply when a business moves into or out of a premises, including opening and closing meter readings and, where nobody has signed a new contract, a deemed contract until one is agreed. Read more
Commodity costs: The wholesale cost of the gas or electricity itself, before network charges, policy costs, supplier costs and tax. Ofgem says the wholesale cost makes up about half of the amount of an overall bill. Read more
Connection and Use of System Code (CUSC): The industry code that sets the terms for connecting to and using Great Britain's electricity transmission system. Its charging methodology is the basis for how TNUoS and BSUoS charges are calculated.
Cooling-off period: A window after agreeing a contract in which you can cancel without penalty. Business energy contracts do not have one, even if agreed over the phone, so it is worth reading the terms carefully before you say yes. Read more
Credit check: A check a supplier runs on your business, and often on you personally, before agreeing a contract. A poor result can lead to a security deposit being required or a contract being refused. Read more
CT metering and whole current metering: Whole current metering passes a site's full electrical current through the meter. CT metering measures it indirectly using current transformers, and National Grid Electricity Distribution says it is usually required for larger industrial and commercial sites with a maximum import capacity of 70 kVA or more.

D

Daily metered (DM) and non-daily metered (NDM) gas: Daily metered sites, typically large industrial customers, have their gas use read and reported every day. Every other site is non-daily metered, so its demand is estimated using factors such as the weather and corrected later through reconciliation once readings arrive.
Data aggregator (DA): An organisation that processes half-hourly meter readings into the format suppliers need for billing and industry settlement. Most businesses never deal with their data aggregator directly. Read more
Data collector (DC): The organisation responsible for collecting readings from a half-hourly meter and passing them on for processing. It is usually appointed by your supplier, not chosen by you. Read more
Day-ahead price: The wholesale price agreed the day before electricity is actually used, set through auctions that match supply and demand for each hour of the next day. It is one of several reference prices used when a supplier buys power for you. Read more
DCP161: A change to the DCUSA, approved by Ofgem on 15 October 2014, that improved how the excess capacity charge is calculated. Implementation was deferred and it took effect on 1 April 2018. Sites that draw more than their agreed capacity are charged for the excess at a separate rate. Read more
DCUSA (Distribution Connection and Use of System Agreement): A multi-party contract between electricity distributors, suppliers and generators covering use of the distribution network, including the methodology for DUoS charges. Rule changes are made through numbered change proposals, such as DCP161 on excess capacity charges.
Deemed contract: The contract you are automatically on when you are using energy at a premises without having agreed terms with the supplier, for example after moving in without signing anything. Deemed rates are usually higher than a negotiated contract. Read more
Demand Flexibility Service (DFS): A NESO service that rewards homes and businesses, through their supplier or an aggregator, for changing when they use electricity at times the system needs support. To take part you need a working smart meter and a supplier or aggregator registered for the service. It has run year-round since 27 November 2024.
Direct debit: A payment method that lets your supplier collect your bill automatically from your bank account. Some business tariffs offer a discount for paying this way, though it is less common than on domestic deals.
Distribution network operator (DNO): The company that owns and maintains the local electricity wires and substations that carry power to your premises. It is set by your postcode, does not sell you energy, and is separate from your supplier. Read more
DUoS (Distribution Use of System charge): The charge your local electricity network operator makes for using its wires, collected by your supplier and passed through as part of your bill. Rates often vary by time of day to reflect how busy the network is. Read more

E

EBRS and EBDS (Energy Bill Relief Scheme and Energy Bills Discount Scheme): Two government schemes that gave qualifying non-domestic customers a discount on gas and electricity unit rates. The Energy Bill Relief Scheme ran from October 2022 to March 2023, and the Energy Bills Discount Scheme replaced it on 1 April 2023 and ended on 31 March 2024.
Economy 7: A time-of-use tariff structure with a cheaper overnight rate and a more expensive daytime rate, requiring a meter that records the two periods separately. It suits businesses that can shift some usage to the night. Read more
EDCM (EHV Distribution Charging Methodology): The method distributors use to set DUoS charges for the largest connections, those at extra high voltage. Charges are worked out site by site using a model that is not publicly available because of commercial confidentiality.
EII exemption (Energy Intensive Industries): A government scheme that exempts eligible UK manufacturers from the indirect costs of Contracts for Difference, the Renewables Obligation, Feed-in Tariffs and the Capacity Market, and gives them compensation for part of their network charges (90% of eligible charges from 1 April 2026). To qualify, a business must be in an eligible sector and pass a 20% electricity intensity test, then pass its certificate to its supplier.
Elexon: The not-for-profit company that administers the Balancing and Settlement Code. It compares the electricity generators and suppliers said they would produce or use with the actual volumes, calculates prices for the differences and moves the money. Market participants fund it.
Embedded generation: Electricity generated at or near where it is used, such as rooftop solar, and connected directly into the local distribution network rather than the national transmission grid. Read more
End of fixed term notification: The notice a supplier sends before a fixed-term contract expires, setting out what you will move onto by default and the options you have. Ofgem says the notice period for acting on it is usually a minimum of 30 days. Read more
End user category (EUC): The group a gas supply point is placed in alongside others with similar demand patterns, used to share out gas demand and unidentified gas and for invoicing. It is set by location and annual quantity and, in some cases, by the type of site or how much of the usage falls in winter.
Energy broker: A company or individual that finds and negotiates business energy contracts on your behalf, usually paid a commission built into the price. Since October 2024 suppliers must show any broker fee clearly in the contract's principal terms. Read more
Energy Ombudsman: The independent body that can resolve unresolved complaints between a micro or small business and its energy supplier or broker, once the supplier's own complaints process has had a fair chance to fix it. Read more
Energy Theft Referral Assessment Service: A Great Britain-wide service, approved by Ofgem under the Retail Energy Code in 2025, that assesses reports of suspected energy theft and refers the most serious cases on for full investigation. Read more
ESOS (Energy Savings Opportunity Scheme): A mandatory UK scheme requiring large businesses to carry out energy audits every four years, identifying cost-effective ways to cut energy use. Qualifying businesses must notify the Environment Agency that they have complied. Read more
Estimated annual consumption (EAC): An estimate of how much energy a customer will use over 12 months, based on the best available information about past use. It is used to estimate bills and quotes, and in electricity settlement it stands in until an annualised advance can be worked out from real readings. Check that the figure on your quote matches your bills. Read more
Estimated bill: A bill based on a supplier's estimate of your usage rather than an actual meter reading, common where a meter has not been read recently. Submitting your own reading corrects it on your next bill. Read more
Evergreen contract: A rolling, open-ended business energy contract with no fixed end date, as opposed to a fixed term. Notice to leave an evergreen contract cannot be more than 30 days for a microbusiness. Read more
Excess capacity charge: An extra charge for drawing more than your maximum import capacity in a billing period. It is charged per kVA per day on the amount you went over, for the whole billing period, and one distributor says it is typically two or three times its standard capacity rate. Read more
Exit fee: A charge for ending a fixed-term business energy contract before it finishes. It does not apply if you leave at the end of your term, and microbusinesses cannot be charged one for leaving during a rollover period. Read more

F

Feed-in Tariff (FIT): A scheme that required licensed electricity suppliers to pay small-scale generators for the electricity they generate and export. It closed to new applicants on 1 April 2019, but the costs of existing installations are still shared across all licensed suppliers, so it remains a non-commodity cost. Read more
Fixed contract: A contract where your unit rate and standing charge stay the same for an agreed term, usually one to three years, giving cost certainty even if wholesale prices move. Read more
Flexible (flex) contract: A contract where some or all of your rate tracks the wholesale market rather than being fixed in advance, giving the chance of lower prices but more exposure to price rises. It suits larger businesses that can manage the risk. Read more
Forward curve: The forward prices for energy delivered in future months, quarters and seasons. Ofgem describes forward contracts covering at least a month of delivery as making up the curve, with the nearest contracts called the near curve and those from two quarters out the far curve. Read more
Forward price: A wholesale price agreed now for energy to be delivered at a set point in the future, months or years ahead. Suppliers often buy in advance this way to fix the cost behind a fixed-rate contract. Read more

G

Gas day: The 24 hours from 5am on one day to 5am on the next, which is how the gas system is traded and balanced. Gas prices such as the System Average Price are worked out for each gas day rather than each calendar day.
Gas shipper: A company with a shipper licence that buys gas from producers, sells it to suppliers and arranges for gas transporters to carry it to consumers. Shippers are the parties that face gas imbalance (cash-out) charges. A supplier either contracts with a shipper or holds a shipper licence itself.
Gas transporter (GT): A company that maintains and operates the pipes that carry gas. National Gas Transmission runs the high-pressure National Transmission System, and the gas distribution networks run the lower-pressure local mains that reach homes and businesses.
Green Gas Levy and Green Gas Support Scheme: The Green Gas Support Scheme pays new biomethane plants for the gas they inject into the grid, and the Green Gas Levy funds it. The levy is paid quarterly by licensed gas suppliers based on the number of meter points they serve, and Ofgem lists it among the environmental and social costs passed through to customer bills. Read more
Green tariff: A business energy tariff marketed as renewable, typically backed by REGO certificates matching your usage to renewable generation. It does not necessarily mean the electrons reaching your meter came directly from a renewable source. Read more
GSP group (Grid Supply Point group): A distinct electrical system made up of the distribution network or networks fed from the transmission system through one group of grid supply points. The electricity supplied into each group is measured half-hourly so that it can be matched against what suppliers' customers used.

H

Half-hourly meter: A meter that records and reports consumption every half hour rather than as a single total. It is compulsory for the largest electricity users and optional for smaller ones that want more detailed data. Read more
Heat pump: A system that extracts heat from the air, ground or water to heat a building, using electricity to run it rather than burning gas or oil directly. Running costs depend heavily on the building's insulation and the pump's efficiency. Read more
Hedging: Buying gas and electricity ahead of when they are needed, which is how suppliers protect customers from sudden market swings. Ofgem says hedging often causes a delay between changes in wholesale prices and what customers pay. Read more

I

IDNO (independent distribution network operator): A company that owns and operates part of the local electricity network, often on a new housing or business development, instead of the regional DNO. It still connects into the same wider distribution system. Read more
Imbalance price: The price used to settle the gap between the electricity a supplier or generator contracted to deliver or use and what was actually metered in each half hour. There is now a single price, so the price paid for being short equals the price received for being long. It reflects the cost of the actions NESO takes to balance the system.
Independent connection provider (ICP): A company independent of your distributor that can quote for, build and connect the competitive parts of a new electricity connection. You do not have to use your distributor for every connection service, although the distributor still carries out the work that is not open to competition. Read more
Independent gas transporter (iGT): A company that develops, operates and maintains a local network of gas pipes, often on a new development, instead of the regional gas distribution network. It is the gas equivalent of an electricity IDNO.

K

kVA (kilovolt-amp): The unit used to measure the capacity of an electricity supply, as opposed to kWh, which measures energy actually used. Your agreed supply capacity, and any capacity charges, are set in kVA. Read more
kW (kilowatt): A unit of power, measuring the rate at which electricity is used at a given moment. It is different from a kWh, which measures energy used over time. Read more
kWh (kilowatt hour): The standard unit of energy used on gas and electricity bills, equal to using 1 kW of power for one hour. Your unit rate is the price charged for each kWh you use. Read more

L

Landlord energy supply: An arrangement where a landlord holds the energy contract for a building and recharges tenants for their share, common in serviced offices and multi-let commercial premises. Rules on how landlords can recharge tenants vary by lease and premises type. Read more
Letter of authority (LOA): A signed document giving a broker or third party permission to deal with your energy supplier on your behalf, for example to gather bill data or negotiate a contract. It does not commit you to any deal the broker arranges. Read more
Licence condition: A rule set by Ofgem in a supplier's or network operator's operating licence, covering everything from how it treats customers to how it handles switching. Breaching licence conditions can lead to Ofgem enforcement action. Read more
Line loss factor (LLF): A multiplier used to scale up the energy measured at a meter to allow for electricity lost on the distribution network on its way there. Each licensed distributor calculates its own.
Line loss factor class (LLFC): A group of meters that a distributor has given the same line loss factor values. Every metering system in the class has the same factors applied.
Low Carbon Contracts Company (LCCC): The company, wholly owned by the Secretary of State for Energy Security and Net Zero, that holds Contracts for Difference with low-carbon electricity generators. It collects the CfD levy from licensed electricity suppliers to fund the payments to generators, and suppliers recover that cost through customer bills. Read more
LV, HV and EHV (voltage levels): The voltage a connection is metered at sets which DUoS tariff applies. National Grid Electricity Distribution defines low voltage as metered below 6,600 volts, high voltage as above 6,600 and below 22,000 volts, and extra high voltage as above 22,000 volts.

M

Market liquidity: How easily a product can be bought or sold without a major change in its price or high transaction costs. Ofgem monitors liquidity in the Great Britain power market, including how it differs between day-ahead and longer-dated contracts.
Market-wide Half-Hourly Settlement (MHHS): The reform that moves every electricity meter in Great Britain onto half-hourly settlement, so suppliers are charged for the energy their customers actually used each half hour rather than an estimate. Migration began on 22 October 2025 and is due to finish in May 2027, with the faster settlement timetable starting in July 2027. Read more
Maximum demand meter: A meter used for larger sites that records the highest rate of electricity use over a period, not just total consumption, because network and capacity charges depend on peak demand as well as total usage. Read more
Maximum import capacity (MIC): The maximum apparent power, in kVA, that your connection agreement lets you draw from the distributor's network. It is the figure your capacity charge is based on, and it is the same idea as agreed supply capacity. National Grid Electricity Distribution allows only one reduction in any 12 months. Read more
Maximum resale price: An Ofgem direction that caps the price at which gas or electricity bought from a supplier can be resold. The current direction sets the cap at the price the reseller paid the supplier for each unit. Read more
Measurement class: Elexon's classification of how a meter is measured for settlement. Class A is non-half-hourly metering, classes C, E, F and G are half-hourly (C above 100kW, and E, F and G below it), and classes B and D are unmetered supplies.
Meter operator (MOP): The company responsible for installing, maintaining and testing your meter. It is usually appointed by your supplier and is a separate role from the company that reads the meter or bills you. Read more
Meter operator charge: The charge for the company that provides and maintains your electricity meter and its communications, typically on a five-year lease. Ofgem says a meter operator charge that was not specified in your supply contract is a default charge.
Meter point administration number (MPAN): The unique reference number for an electricity meter point, found on your bill. The first two digits identify your distribution network operator. Read more
Meter point reference number (MPRN): The unique reference number for a gas meter point, used by suppliers and gas transporters to identify your specific supply when you switch or raise an issue. Read more
Meter serial number (MSN): The unique number printed on the meter itself, used to confirm you are reading or reporting on the correct physical meter, particularly where a premises has more than one. Read more
Meter tampering: Interfering with a gas or electricity meter so it under-records usage, or bypassing it altogether. It is a criminal offence under the Theft Act 1968 and a serious safety risk. Read more
Microbusiness: A business that uses no more than 100,000 kWh of electricity or 293,000 kWh of gas a year, or has fewer than 10 employees and turnover or a balance sheet of no more than £2 million. Microbusinesses get extra protections, such as limits on rollovers and back-billing. Read more
Multi-site contract: A single business energy contract covering more than one premises, usually with the same supplier, rates structure and renewal date, which can simplify billing for businesses with several sites. Read more

N

National Balancing Point (NBP): A virtual point on the UK gas system through which all gas passes in accounting and balancing terms. It is where shippers nominate their buys and sells and where the daily balancing is carried out, and it has also become a trading point.
NESO (National Energy System Operator): The publicly owned, operationally independent body that began work on 1 October 2024. It operates Great Britain's electricity transmission system and plans the wider energy system, and it publishes TNUoS and BSUoS charges and administers the Capacity Market.
Net zero: A state where any greenhouse gas emissions a business or country produces are balanced by an equivalent amount removed. The UK's legal target is net zero by 2050; Scotland's own target is 2045. Read more
New connection: The process of getting a new electricity or gas supply installed at a premises that does not already have one, or upgrading an existing one. Your DNO or gas transporter, not your supplier, carries out the physical work. Read more
NIE Networks: The company that owns and operates the electricity distribution network, and holds the transmission licence, in Northern Ireland. It is the Northern Ireland equivalent of a Great Britain DNO. Read more
Non-commodity costs: Everything on a business energy bill that is not the wholesale price of the gas or electricity itself: network charges, balancing costs, environmental and social scheme costs, and tax. They typically make up around half of a fully delivered rate. Read more
Non-half-hourly meter: A meter that records total consumption rather than half-hourly detail, typical of smaller business supplies. Usage is billed from actual readings or, where none is available, an estimate based on industry values such as the estimated annual consumption or your consumption history. Read more
Notice period: The advance warning a contract requires before you can end it or leave at renewal. Microbusinesses cannot be required to give notice to leave at the end of a fixed term, but other businesses should check their contract. Read more
Nuclear RAB levy (Regulated Asset Base): A levy on electricity suppliers, passed on to consumers, that funds nuclear projects financed under the Regulated Asset Base model, starting with Sizewell C. The Low Carbon Contracts Company reports that revenue commencement began in November 2025.

O

Objection (switching objection): A formal block placed by your current supplier on a switch to a new one, only allowed in limited cases such as a contract term permitting it or unpaid, undisputed bills. Read more
Off-peak: The periods, usually overnight and at weekends, when electricity demand and network charges are lowest. Time-of-use tariffs charge less for energy used in these periods. Read more
Ofgem: The Office of Gas and Electricity Markets, the independent regulator for the gas and electricity markets in Great Britain. It sets supply licence conditions, the domestic price cap, and network price controls. Read more
On-the-day Commodity Market (OCM): The market National Gas uses to balance the gas system, where participants trade anonymously for delivery on the same day or the next. The volume-weighted average price of the trades for a gas day becomes the System Average Price. Read more
Out-of-contract rates: The rate you are charged if you keep using energy at a premises after a fixed contract ends without agreeing a new one or being rolled over. Like deemed rates, they are usually higher than a negotiated contract. Read more

P

P272: A Balancing and Settlement Code change, approved by Ofgem in October 2014 and in force from 1 April 2017, that made half-hourly settlement mandatory for meters in profile classes 5 to 8 that have advanced meters capable of remote reading. Before it, those meters could be settled on a non-half-hourly basis even though they could provide half-hourly data. Read more
P442: A Balancing and Settlement Code change, approved by Ofgem on 8 May 2024 and implemented in February 2025, that lets the volumes from a single meter be split between licensed supply and licence-exempt supply for reporting. It created a new role, the Exempt Supply Notification Agent, and matters mainly where a licence-exempt supplier such as a community energy scheme serves customers.
Pass-through contract: A contract where the wholesale energy cost may be fixed, but some or all non-commodity costs are passed on at their actual cost rather than baked into the rate, which can move your bill during the contract term. Read more
Peak rate: The unit rate charged during the busiest, most expensive periods on a time-of-use tariff, typically weekday early evenings. Wholesale and network costs are both usually highest at these times. Read more
Power factor: A measure of how efficiently a site uses electricity, comparing the useful power drawn to the total power supplied. A poor power factor, common with certain motors and equipment, can trigger reactive power charges. Read more
Power purchase agreement (PPA): A long-term contract to buy electricity directly from a specific generator, often a renewable project, at an agreed price. Larger businesses use PPAs to lock in green power and support new generation directly. Read more
Principal terms: The core details of a business energy contract a supplier must set out clearly before you agree it: price, contract length, and any relevant fees. Suppliers must present these in plain language to microbusinesses. Read more
Profile class: A category used to estimate how a non-half-hourly electricity meter's usage is likely to be spread across the day, used for billing and industry settlement rather than for reading your actual usage pattern.

Q

Qualifying use (VAT): Use of fuel and power that can be charged VAT at the 5% reduced rate: domestic use, a charity's non-business use, and supplies small enough to fall within the de minimis limits. Energy for other uses is charged at the standard 20%, and a mix of uses is covered by the 60% rule. Read more

R

RCRC (Residual Cashflow Reallocation Cashflow): After imbalance charges are settled, the money paid in and out does not exactly match, leaving a residual. Elexon does not keep it and instead shares it back to market participants every day in proportion to their volumes, so the amount can be positive or negative in each half hour.
Reactive power: Power drawn by certain equipment, such as motors, that does not do useful work but still has to be supplied by the network. Sites with a poor power factor can be charged separately for it. Read more
Red, amber and green time bands (DUoS): The time-of-day bands used to price the unit-rate part of DUoS for half-hourly sites. Red is the peak and most expensive band, usually weekday early evening, green is the lowest-priced and amber sits between. The hours differ between distributors and are set out in each one's charging statement. Read more
REGO (Renewable Energy Guarantees of Origin): A certificate issued for each unit of renewable electricity generated, which suppliers buy and retire to back up a green tariff. It proves the renewable claim on paper rather than tracing specific electrons to your meter. Read more
Renewables Obligation (RO): A scheme that obliges electricity suppliers to present a set number of Renewables Obligation Certificates for each megawatt hour they supply, or pay into a buy-out fund. Ofgem administers it, it closed to new generating capacity on 1 April 2017, and its cost is passed through to customers as a non-commodity cost. Read more
Renewal window: The period before a fixed contract ends when a supplier sends renewal terms and you can agree a new deal or shop around. Microbusinesses must be sent a statement of renewal terms in good time before the contract ends. Read more
Retail Energy Code (REC): An industry code governing how suppliers, network companies and other parties work together on switching, data and market processes in Great Britain's retail energy market, including rules on tackling energy theft. Read more
Rollover contract: What happens if you take no action at the end of a fixed-term contract: your supplier renews you onto another fixed term, usually at a higher rate. Microbusiness rollovers are capped at 12 months and carry no exit fee. Read more

S

SAP (System Average Price): A published reference price for gas traded on the day, used as one benchmark among several for how wholesale gas is moving. It is one input suppliers may refer to, not a price any business is billed directly. Read more
Scope 1, 2 and 3 emissions: A standard way of categorising a business's greenhouse gas emissions: scope 1 is direct emissions from things you own or control, such as a boiler; scope 2 is emissions from the electricity you buy; scope 3 covers everything else in your supply chain. Read more
SECR (Streamlined Energy and Carbon Reporting): A UK requirement for large companies to report their energy use and carbon emissions in their annual accounts, intended to make energy performance visible to investors and the public. Read more
Security deposit: An upfront sum a supplier can ask a business to pay, or hold against a credit or debit card, if a credit check raises concerns. It is returned or offset once you have built a payment history. Read more
SEG (Smart Export Guarantee): A scheme requiring larger electricity suppliers to pay small-scale generators, including businesses with solar panels, for electricity they export back to the grid. Rates are set by each supplier rather than by government. Read more
Settlement: In electricity, the process of comparing the volume each party contracted to buy or sell with what was actually metered in each half hour, then charging or paying for the difference. Elexon runs it under the Balancing and Settlement Code.
Settlement period: A half hour, the unit in which electricity is traded and settled in Great Britain. A normal day has 48 settlement periods, with 46 on the day the clocks go forward and 50 on the day they go back.
Small business: A business that is not a microbusiness but uses no more than 200,000 kWh of electricity or 500,000 kWh of gas a year, or has fewer than 50 employees and turnover up to £6.5 million or a balance sheet up to £5 million. Since 19 December 2024 some protections that previously covered only microbusinesses extend to small businesses, such as the requirement that brokers belong to a qualifying dispute resolution scheme. Read more
Smart meter: A meter that sends readings to your supplier automatically and can often be read remotely, removing the need for estimated bills or manual readings in most cases. Read more
SONI: The System Operator for Northern Ireland, a subsidiary of EirGrid that holds the transmission system operator licence and helps run the Single Electricity Market shared with the Republic of Ireland. Read more
SOQ (Supply Offtake Quantity): The highest daily amount of gas, in kWh, that a site is expected to use under 1-in-20 peak day conditions, meaning a severe cold day. For smaller sites it is worked out from the annual quantity, and it affects transportation charges and the system capacity set aside for the site.
SP Manweb: The trading name of SP Energy Networks in Merseyside, Cheshire and north Wales, where it owns and operates the electricity distribution network. Read more
Spot price: The price for energy delivered on the same day or the next day, as opposed to forward contracts for later months. In its analysis of the Great Britain power market, Ofgem counts both within-day (intraday) and day-ahead trading as spot trading. Read more
SSC (Standard Settlement Configuration): A standard way a non-half-hourly electricity meter is set up for settlement, which the industry's central settlement system recognises. It works together with the time pattern regime, which says when each register records.
Standing charge: A fixed daily charge on your bill for having a supply connected, charged regardless of how much energy you use. It covers network and operating costs that do not vary with consumption. Read more
Statement of renewal terms: A document a supplier must send a microbusiness setting out the terms it would move to if the current fixed contract simply rolled over, giving the business a clear comparison point before deciding whether to switch. Read more
Strike price: In a Contract for Difference, the price a low-carbon generator is guaranteed, set to reflect the cost of investing in its technology. The generator is paid the difference between the strike price and the reference price, a measure of the average Great Britain market price for electricity. Read more
Structured contract: Another name for a flexible contract. Ofgem says these suit large businesses that use a lot of energy and let a company buy energy in smaller portions when market conditions are better, rather than locking into a single fixed price. Read more
Supplier of last resort (SoLR): The replacement supplier Ofgem appoints to take over your account if your existing supplier goes out of business, so your gas or electricity supply is not interrupted. Business credit balances are not guaranteed to be protected in the way domestic ones are. Read more

T

Take-or-pay clause: A contract term requiring you to pay for a minimum amount of energy whether you use it or not, common in larger flexible contracts. It sits alongside, and is stricter than, an ordinary volume tolerance band. Read more
Targeted Charging Review (TCR): An Ofgem review, with its decision published on 18 December 2019, that concluded residual network charges, which recover the fixed cost of existing pylons and cables, should be fixed charges for all households and businesses. The amount a business pays is based on its annual usage and type of meter. Read more
Third-party intermediary (TPI): Ofgem's formal term for a broker, consultant or comparison service that helps a business buy energy. Suppliers can only work with TPIs signed up to a qualifying dispute resolution scheme for micro and small business contracts. Read more
Three-phase power: An electricity supply using three alternating currents instead of the single-phase supply found in most homes, giving access to more power for heavier equipment such as commercial kitchens, workshops and larger machinery. Read more
Time pattern regime (TPR): A code describing when a meter register is and is not recording usage, such as the day and night registers on a two-rate meter. Settlement uses it to work out which energy was used at which times.
Time-of-use tariff: A tariff with different unit rates depending on the time of day or week energy is used, usually cheaper overnight and more expensive at peak times. It suits businesses that can shift some usage to cheaper periods. Read more
Tloss and Dloss (transmission and distribution losses): Some electricity is lost as heat on its way through the wires. Line loss factors scale up the energy measured at your meter to allow for losses on the distribution network, and a separate set of multipliers allows for losses on the transmission system.
TNUoS (Transmission Network Use of System charge): A charge that covers the cost of the national high-voltage transmission grid, collected from suppliers and generators and passed through as part of a business bill's non-commodity costs. Read more
Triad: The three half-hour periods of highest demand on the Great Britain transmission system between November and February, at least ten clear days apart, only known once the winter is over. For half-hourly metered sites NESO uses them to set the locational part of TNUoS, based on average demand across those three periods. The residual part is a separate fixed daily charge that does not depend on Triad demand.

U

UK Emissions Trading Scheme (UK ETS): A UK carbon market covering energy-intensive industry, power generation and aviation. Each covered operator must obtain one UK allowance for every tonne of carbon it emits and surrender them each year. If your business is not in one of those sectors you do not hold allowances yourself.
Uniform Network Code (UNC): The legal and commercial framework that governs the arrangements between gas transporters and shippers in the UK gas market. It includes the rules behind gas balancing and imbalance charges.
Unit rate: The price charged per kWh of gas or electricity used, separate from the standing charge. Multiplying your unit rate by your usage gives the energy cost element of your bill, before non-commodity costs and tax. Read more
Unmetered supply: A supply, such as street lighting or some illuminated signage, billed on an agreed estimate of usage rather than through a meter, because fitting one would not be practical.
Utility Regulator (Northern Ireland): The independent body that regulates electricity, gas, water and sewerage in Northern Ireland, separately from Ofgem, which regulates Great Britain. Read more

V

Variable-rate contract: A contract where the price you pay for energy can rise or fall during the contract period, for example because it moves when wholesale prices change. With a fixed-rate contract the unit rates and standing charges stay the same for the whole term. Read more
VAT certificate (mixed use): A declaration you give your supplier when premises are used partly for qualifying use and partly for other purposes, stating the percentage that is qualifying. If 60% or more is qualifying, the whole supply gets the reduced rate, and otherwise the bill is split. The declaration must come from a responsible officer or official of your organisation. Read more
VAT de minimis: A low-usage threshold below which business energy qualifies for the reduced 5% VAT rate: electricity up to 33 kWh a day or 1,000 kWh a month, and gas up to 145 kWh a day or 4,397 kWh a month. Read more
VAT on business energy: Business gas and electricity are normally charged VAT at the standard rate of 20%. A 5% reduced rate applies to qualifying use, and from 1 October 2026 to 31 March 2027 qualifying electricity in Great Britain is zero-rated. Whether you qualify depends on how the energy is used. Read more
VAT zero rate (temporary, electricity): A temporary 0% VAT rate for electricity in Great Britain that already qualifies for the reduced rate, such as domestic use, a charity's non-business use and supplies under the de minimis limits, running from 1 October 2026 to 31 March 2027. Business electricity charged at the standard 20% is not covered. It does not apply to gas, and Northern Ireland stays at the 5% reduced rate. Read more
Volume tolerance clause: A contract term allowing your actual usage to fall within a band around the estimate you gave when you signed up, without extra charges. Usage outside the band can be charged at a different, often higher, rate. Read more

W

Wholesale price: The price energy companies pay for gas or electricity in bulk before it reaches your bill. It is the single biggest driver of what suppliers charge, though it typically makes up only part of your final unit rate once non-commodity costs are added. Read more
Within-day price: The price for energy bought for delivery later on the same day. Ofgem groups within-day and day-ahead trades together as spot trading. Read more
Working from home (business energy): Running a business from a home address, where you usually stay a domestic energy customer rather than a business one unless the property is used mainly for business or your usage is clearly commercial. Read more

X

Xoserve: The company that runs Great Britain's central gas data systems as the Central Data Service Provider. Among other things it calculates the annual quantity for each gas supply point.

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