Energy is notoriously a difficult industry to understand. With so many overlapping terms, difficult-to-decipher acronyms, and complex calculations making up the amount you pay, there’s so much to consider when it comes to better understanding the energy sector, and making a more informed decision for your business.
That’s where Tariff plays a pivotal role. We’ve long been committed to making energy and its associated terminology more digestible and easier to understand, as well as connecting businesses with a more sustainable and budget-friendly future.
That’s the impetus behind our decision to explore all you’ll need to know about energy terminology. We’ll be using our latest article to break down some of the most popular terms you’ll see across the energy industry, what they mean, and why they matter to you and the amount you pay.
Let’s look at a few of the key terms you’ll see and hear. We’ll run through these in alphabetical order, alongside any common acronyms you’ll have encountered.
Measured in watts (as kW or MW), this is the rate at which electrical energy is produced, transmitted and used.
The average amount of energy your home or business uses on a daily basis, measured in kWh.
This is the agreed amount of electricity supply or load that’s sent to a premises. It’s an essential consideration for larger enterprises.
This is where electricity and gas meter readings are taken automatically, and sent across to your provider. There’s often a charge associated with this.
A year-long contract with your energy supplier.
A yearly rate added on to any loans you’ve taken out, or investments you’ve made. This can appear on your energy bills.
An air source heat pump absorbs outdoor heat from the air, and distributes this indoors. It’s often touted as a good solution for more rural areas, and for those looking to heat their premises cheaply.
Bills sent to your premises when you’ve not been properly charged for the energy you consumed.
The minimum expected level of demand across the electricity grid over a set amount of time (such as weekly, monthly, biannually, or annually).
The Base Rate, also known as the Bank of England’s Base Rate, is the 5.25% interest added to any purchase, loan or contract.
The Department for Business, Energy and Industrial Strategy. It was split down in 2023 into several other departments, including the Department for Energy Security and Net Zero (DESNZ).
See our section on Large Energy Suppliers.
The period your energy bill covers. These are usually on a monthly or annual basis, but certain contracts will have longer or shorter periods.
Biomass is any organic material that can be used provide power, and biofuel refers to any fuel derived from that organic material (such as petrol and diesel sourced from waste).
These are credits provided to businesses for every “eco-friendly” initiative they invest in. These are a key part of the push towards net-zero.
This is the state where a business’ carbon expenditure is matched by their carbon offsetting initiatives (such as carbon credits).
The tax applied to every tonne of carbon dioxide (CO2) a business produces.
The Climate Change Levy (CCL) is a tax that’s charged associated with the energy that businesses and homes use. The more renewable energy you use, the less this tax will impact your bills.
Carbon Capture & Storage. This involves capturing the carbon emission produced through industrial and manufacturing processes, and storing it in special containers underground. It’s often viewed as an innovation in carbon offsetting, and a good step forward towards carbon neutrality.
Contracts For Difference. A government initiative designed to provide significant levels of support and funding to renewable energy generation.
The common name given to the costs associated with the generation and distribution of the electricity and gas you use.
The date your current energy tariff contract ends, and the date by which you’ll need to have arranged your next contract in order to avoid costly deemed rates.
The time you’re given after choosing an energy provider to cancel your contract with no penalty. These are common in domestic contracts, but less so in business energy.
The Department of Energy and Climate Change. Formerly its own branch of government, it was absorbed by the Department for Business, Energy and Industrial Strategy in 2016.
This is the contract you’ll be placed on if you move into a new premises without first agreeing a contract with a provider, and proceed to use any energy. These are often much more expensive than an agreed-upon contract.
The Department for Energy Security and Net Zero. This split from the Department for Business, Energy and Industrial Strategy in 2023, and seeks to better illuminate the future of renewable energy.
The network by which your gas and electricity is delivered to your premises. This is regional, so London has a different distribution network to the North West.
The operator for the distribution network in your area. For instance, in London this is London Power Networks plc., and for the North West this is Electricity North West.
A combination deal of gas and electricity. This is most common in domestic properties – businesses generally won’t be offered a dual fuel contract.
The Distribution Use of System. A charge applied to cover the cost of receiving your power from the regional distributor. Closely relates to TNUoS (Transmission Network Use of System).
From electricity to kilowatts, we’ll break down some of the latest and most prevalent terms across the energy sector.
Estimated Annual Consumption. The estimate done by your energy company about how much your home or business will use over the course of the year.
The monthly or annual bill you’ll receive for the electricity you’ve used.
How well a business or home consumes its energy. This is usually applied to practical aspects of heating and lighting (like boilers or light fixtures), but can also refer to a business’ adoption of renewable energy or sustainability practices.
An independent body appointed by Ofgem that can help solve disputes with your energy company, as well as provide advice on resolving any energy issues.
The company that provides your electricity, gas or water. For instance, British Gas (owned by Centrica plc.) are one of the more popular energy suppliers UK-wide.
This is your energy supplier’s best estimate at your current meter reading. It can mean that your actual bill increases or decreases when an accurate meter reading is received.
A contract that has no predefined or agreed-upon end date. These aren’t common, but can be a good option for larger businesses with a stable premises.
The Water Supply (Water Fittings) Regulations of 1999. It sets standards for the quality of water that’s distributed by suppliers across the UK.
This is a contract where the rate you per kWh of power is set at a predetermined amount. Often seen as the counterpart to variable rate contracts.
A contract that lasts for a specified length of time. This is usually annual, but businesses can have contracts that last up to 5 years.
Fuel Mix Disclosure. A requirement for all electricity suppliers to disclose openly where they source their electricity from.
This applies to any non-renewable, finite source of fuel. It’s most commonly associated with coal, oil and natural gas.
The term applied to any household or business that uses 10% or more of their annual income to cover energy bills.
The bill you’ll receive from your gas supplier. Usually issued on a monthly or annual basis, but certain contracts may use a different timescale.
The network by which gas is distributed to homes and businesses. The UK is split into 5 different gas distribution networks, with each covering a different region. For example, the gas distributor for the North West is Cadent.
A small facility located on-site that reduces that stabilises pressurised gas for use in domestic or business properties.
The Green Gas Support Scheme. A governmental scheme designed to promote the use of greener, cleaner gas sources (namely anaerobic digestion biomethane) through financial incentives.
The Greenhouse Gas Protocol. Established in 1998, the protocol sets out standards for greenhouse gas emissions, and how to reduce those in line with the latest developments.
An energy tariff or deal that provides you with electricity from either fully renewable sources, or an even blend of renewables and non-renewables.
The rate at which energy is produced at power plants. More technically, it’s the amount of input (or heat) needed to produce one unit of output.
Half Hourly Data. The data and information that HH Meters send across to the energy supplier.
Half Hourly Meters. These send reliable data across to the energy provider on a half-hourly basis through AMR, ensuring accurate monthly bills.
A particularly large consumer of energy. Ofgem states that this is a user who expends more than 5,100 kWh of electricity, and/or 23,000 kWh of gas.
This is any electricity generated through hydropower. These are usually dams or underwater turbines that turn the flow of water into energy.
Independent Gas Transporter. A gas transportation network that operates outside of the main regional gas distribution networks, and can provide power outside of the main grid.
Costs that aren’t a direct result of the energy you consume. This includes your supplier’s operating costs like the CCL and VAT.
Large cables that transport electricity across country borders and longer distances.
Integrated Pollution Prevention & Control. A scheme designed to help manage and mitigate the pollution from industrial-sized businesses.
The standard unit of measurement for electricity and gas. It’s equivalent to 1000 Watts, or around 16 60 Watt lightbulbs in use.
Kilowatt Hour. The measurement of how much energy you use per hour, measured in kilowatts.
Whether you’re confused by the LCBP, or thrown off by ratcheting or regulation, we’ve got all the terms you’ll need to navigate the energy market with ease.
Defined as a business with more than 100 staff, and that uses between 25,000 and 50,000 kWh per year.
Also known as The Big Six. This is the collective name given to the 6 largest energy providers in the UK – British Gas, EDF Energy, E.ON, npower, Scottish Power and SEFE.
The Low Carbon Building Programme. A former government initiative designed to better promote renewable and forward-thinking energy solutions. It ended in 2010, to be replaced by the RHI in 2011.
Liquefied Natural Gas. Natural gas that has been cooled to a liquid state so that it can be transported more easily and safely.
Load management is the controlling of energy and electrical consumption, specifically to ensure fiscal security.
Any lost electricity or gas during the transmission stage.
A customer that uses a much lower amount of electricity. Ofgem defines this as a company that uses less than 2,100 kWh of electricity, and/or 11,000 kWh of gas.
A discount or additional incentive applied to an energy deal for opting to remain with a company for an extended period of time.
Cubic metres. This is the measurement for the water you use at your home or business.
The amount of customers, or the share of the market, an energy company has. Larger companies will have a greater share of the market, for example.
Defined as a business that has between 50 and 100 employees, and that uses in the range of 15,000 and 25,000 kWh per year.
The equipment used to measure how much energy or water a premises uses.
Defined as a business that has less than 9 employees, and uses less than 5,000 kWh per year.
Meter Operator. The company that’s responsible for installing and maintaining your meter, as well as any necessary adjustments or readings.
Meter Point Administration Number. A unique identification number for your electricity supply.
Meter Point Registration Number. A unique identification number for your gas supply.
The notation for megawatt per hour. This is the shortened version of 1000 kWh.
The nationwide distribution network for electricity and gas. It connects to more localised distribution centres, which are then controlled by regional providers.
The costs needed to maintain, repair and run the energy network. Suppliers are charged this, which they then collect from their customers.
These are the companies responsible for maintaining and repairing the pipes and cabling that directs energy to our homes and businesses.
Often referred to as carbon neutral, this is where a business’ carbon emissions match with their carbon offsetting, so they contribute “net zero” towards global carbon production.
Non-Half Hourly Data. This is data that’s not sent to the energy provider on a half-hour basis, and is instead reported on a daily, weekly or monthly basis.
Energy that’s sourced from non-renewable or green sources, such as coal, oil and natural gas.
The National Transmission System. The main pipeline for the gas network – it transports gas across the length and breadth of the UK.
Any times outside of the peak hours of energy usage. Off-peak times are usually after 9pm until 6am, with peak times being during normal business hours, and into the evening when most are at home.
The Office of Gas and Electricity Markets. It’s the independent regulator of the gas and electricity industry across the UK.
The Water Services Regulation Authority. This body regulates water distribution, networks and the private water network.
The online functionality of any electricity and gas providers. Most providers will allow you to pay bills, check meter readings, and ask questions through an online portal.
This is where you’ll receive all of your energy bills online via an email or online portal, rather than through the post.
This is when the National Grid experiences its greatest amount of demand. It’s usually between the hours of 6am and 9pm.
These are the transportation channels for gas and oil. They’re usually deep underground or on the seabed.
This is where you can pay in advance for the energy you use. It’s most common in domestic properties, where you can top up a prepayment meter at a shop or post office.
These are the primary or main terms of the contract you’ll receive when you first sign up. They’re usually related to payment terms, any limitations, and legal information.
Stands for photovoltaic. This means products (usually panels) that use solar energy to provide power.
This means the gradual increase of prices, specific to the energy sector. It’s a regular occurrence, and may be a term as energy prices have gone up over the last few years.
This is water that’s not yet been treated, and includes rainwater, ground water and natural formations like lakes and rivers. It’s not usually safe for consumption.
A person or organisation whose job it is to ensure the fair and stable running of the market. For example, Ofgem is the regulator of the gas and electricity markets.
This is energy that’s sourced from renewable sources, such as hydropower or solar power. Renewable energy has unlimited scope, and paves the way for a brighter future for the environment, businesses and people.
This is any resource or material through which renewable energy can be generated. This includes hydroelectric dams that use fast-flowing water to spin turbines, and biomass generators.
Renewables Obligation Scheme. This initiative was designed to improve uptake of renewable energies, and closed in 2017.
Ranging from smart meters to wind turbines, there’s yet more complex terms that can make the energy sector difficult to navigate.
Smart Export Guarantee. A government-supported initiative that’s designed to reward small-scale renewable energy generators by paying them for the electricity they produce and ship.
A unique identification number given to products and items. In energy, it’s also called an MPAN or MPRN.
Service Industry Code. A specific code that’s assigned to the industry or sector your business operates in. It can be part of any business energy contract application.
Defined as a business that has between 10 and 50 employees, and that uses between 5,000 and 15,000 kWh per year.
A more intelligent, modern form of meter that records data in real time, and can provide homeowners and businesses with a more accurate representation of the energy they use.
Solar (or photovoltaic) panels capture solar energy (from the Sun) to generate electricity. They’re one of the UK’s main sources of renewable energy, alongside wind turbines.
This is the charge you’ll pay to remain connected to the gas and electricity network. It’s applicable even if you use no gas and electricity over the course of your contract.
The company that provides your gas, electricity and/or water. For example, your gas supplier could be British Gas, and your electricity supplier could be Octopus Energy.
An additional charge applied to your bill. This can apply to a variety of factors, from administration costs to standing charges.
The term given to swapping from one supplier to another. This is usually done towards or at the end of your contract.
Any costs that are associated with the switching process. This could be exit costs (such as leaving a contract early), metering and equipment charges, or less quantifiable costs like time or effort.
The window at the end of your current contract (usually around a month) where you can switch to a new provider without penalty or termination fees being applied.
This refers to how much you’ll pay for your energy. It’s also where our name comes from!
The costs associated with terminating (or ending) your energy contract early. This is to prevent any constant or disruptive switching.
A unit of energy measurement. It was refers to gas usage over time, and is roughly equivalent to 29 kWh.
A Time of Use tariff. This means you pay less for energy that you use at off-peak times.
A component in a circuit that allows electricity to be transferred across. It’s an essential part of the National Grid, and diverting power from cables into homes and businesses.
A hidden cost on your gas and electricity bills. It’s the cost associated with the creation, maintenance and upkeep of the network, and any associated costs with transporting the power.
Transmission Use of Service. Any charges associated with the transmission of moving of large quantities of energy across the power grid.
The cost you’ll pay per unit of electricity or gas, measured in kWh.
A tariff that allows you to pay a set amount per month, for a set fee per month. They’re rarely offered due to the volatility of the market.
A property that doesn’t have a water meter, and instead pays a flat charge for water. This consists of a standing charge and an additional fee determined by your provider.
The counterpart to a fixed rate contract. A variable rate means that the amount your pay per kWh fluctuates based on current market trends. This may mean that you pay less one month, and more the month after.
The difference between different tariffs and energy charges.
A charge based on the amount of water you use, measured in M3.
The bill you’ll receive for the water you’ve used at your property. This is usually issued on a monthly basis, but can be done on an annual, biannual, or quarterly basis.
A unit of energy measurement. It’s most commonly seen in energy bills as a kW, or 1000 Watts.
Warm Home Discount. Opening on 23rd October 2023 for ‘23/’24 applications, it provides a £150 discount to lower-income households in England and Wales.
The cost of purchasing the electricity and gas you use. It’s normally included as part of your unit cost, and isn’t usually visible on the average utility bill.
A large turbine that generates electricity through its spinning blades. It’s one of the UK’s largest forms of renewable energy generation.
One of the more common forms of carbon crediting, these are assigned to businesses that have been involved with or invested in woodland initiatives, such as planting trees or foliage.
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