Report: Businesses could be overpaying £500m on energy bills

UK businesses could be losing out on more than £500m in inaccurate charges and miscalculated utility bills, according to new research.

The highest volume of errors were identified in the retail and leisure sectors, mainly due to complex portfolios of sites with multiple meters and frequently changing tenants

The highest volume of errors were identified in the retail and leisure sectors, mainly due to complex portfolios of sites with multiple meters and frequently changing tenants

Utility consultancy firm Inenco has analysed the energy invoices of more than 10,000 companies from a range of sectors, and forecast the scale of the issue for all businesses in the UK.

The study found that one in five bills have errors on them that businesses frequently overlook. The complex flow of data across the supply chain means that major firms may have unknowingly had an incorrect rate applied on their consumption for years, but research suggests that 80% of business do not conduct regular invoice validation and bill audits.

Inenco’s chief commercial officer David Cockshott said: “The size and scale of this issue means this is not just small change being discussed. Collectively, UK businesses could be sitting on half a billion pounds of refunds, at a time when energy costs are rising by 25% and businesses are facing pressure on their bottom line from every direction.

“Paying too much for energy bills because of simple data issues or human error is easily resolved and can result in significant savings for businesses, from direct refunds to preventing future unnecessary pay-outs.”

Validation pays

The highest volume of errors were identified in the retail and leisure sectors, mainly due to complex portfolios of sites with multiple meters and frequently changing tenants. Companies such as high street stores and pub chains are reportedly missing out on £200m of potential revenue, according to Inenco, which revealed that one major supermarket had been overcharged £700,000 in duplicate charges.

The public sector could be overpaying £112m - the equivalent of a third of the NHS’s annual electricity bill - the research found. Meanwhile, manufacturers are thought to be owed more than £65m from suppliers across the energy supply chain, with incorrect application of the Climate Change Levy (CCL) accounting for 10% of the total claims for the past year. Inenco states that new tenants, settlements and volume changes are the reason the property sector could be owed £78.5m.

With businesses set to face heightened stress on the bottom line through rising business rates, an increased national living wage and the new workplace pension scheme, Inenco recommends that businesses pick off the low-hanging fruit immediately.

“Whilst smart meters and smarter systems will go some way towards preventing future inaccuracies, the energy supply chain must work harder to prevent these issues from happening,” Cockshott explained. “It would pay for all businesses to undertake some form of invoice validation to check for incorrect charges and ensure they only pay for the energy they use.”

Complex landscape

Despite the Government recently announcing a review into energy costs for businesses, the Committee on Climate Change (CCC) has stressed that climate policies are adding relatively little to company bills.

Research shows that efficiency measures such as energy management, lighting, heating and metering can save business around 25% on business energy costs. A sample of almost 100 Energy Savings Opportunity Scheme (ESOS) audits by the Carbon Trust found the average cost reduction achievable through the implementation of energy saving opportunities stood at 20%.

While the Government introduced ESOS to help simplify the energy landscape for businesses, a recent edie investigation found that compliance rates for the scheme are below expected levels, with hundreds or possibly thousands of qualifying organisations still unaccounted for almost a year after the final deadline.

George Ogleby


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