Forensic analysis serves as a valuable tool in verifying the accuracy of business utility invoices. Unlike standard utility bill validation services, forensic analysis involves a comprehensive utility invoice audit of invoice data to identify historical discrepancies or applicable schemes for reducing non-commodity energy charges.
This detailed review of supplier billing structures and network charges enables businesses to secure refunds and realise ongoing cost savings based on the recommendations provided. This energy blog will focus on the benefits of forensic analysis for organisations seeking to improve energy cost control and invoice accuracy.
What is Forensic Analysis, compared against Bill Validation?
These two approaches are frequently mistaken for one another, however, they differ significantly. This article aims to clarify these distinctions and to highlight the importance for organisations in conducting a forensic utility invoice audit of their utilities (electricity, natural gas and water invoices) to improve billing accuracy and reduce non-commodity energy costs.
- Bill Validation โ Bill validation services aim to check received utility invoice data for accuracy, highlighting any discrepancies or errors compared to the supplier contract in place. This process usually concentrates on verifying energy rates and other invoice components.
- Forensic Analysis โ Forensic analysis involves auditing both current and historical supplier invoices as part of a detailed utility invoice audit process, sometimes (where necessary) going back up to six years to identify billing errors, particularly regarding non-commodity charges, network charges and policy levies. This approach often includes engaging in complex discussions with energy suppliers and Distribution Network Operators (DNOs) to investigate issues behind the charges appearing on the energy invoices.
Why should businesses look at completing Forensic Analysis?
A supplier energy bill includes the commodity element (energy you actually use better known as wholesale cost) and non-commodity costs which are made up of three main groups and represent a significant portion of total electricity prices in markets such as the United Kingdom and Ireland:
- Network charges, which cover the cost of transporting and balancing energy across the transmission and distribution grids.
- Government policy levies, which fund renewable energy schemes, decarbonisation programmes, and securityโofโsupply mechanisms.
- System and operational charges, which pay for metering, settlement services, and the organisations that keep the energy market running.
Typically, non-commodity costs are based upon regulated rates or tariffs developed by the market regulator, utility commission, or other governmental body. These rates, tariffs, taxes, and levies will have different structures, varying applicability and exemptions, and industry-specific exceptions that directly affect business electricity costs.
Generally, it is incumbent upon the user to identify the most cost-effective options based on the consumerโs usage profile. Most businesses have neither the expertise nor the internal resources to analyse their energy usage profiles and assess all available non-commodity alternatives, exemptions, or tariff structures. To make matters more difficult, many non-commodity electricity charges are modified on a regular basis due to regulatory updates and market reforms.
The following graph demonstrates that electricity prices in both the United Kingdom and Ireland are among the highest internationally, exceeding โฌ275 per MWh. This is largely attributable to elevated non-commodity charges and energy-related taxes.
In the United Kingdom and Ireland, commodity costs represent approximately 30โ40% of the overall business electricity market, while non-commodity charges and energy-related taxes constitute the remaining portion of total electricity prices. This distribution underscores the significance of thoroughly evaluating non-commodity expenses, tariff structures, and available exemptions when analysing business energy costs and identifying opportunities to reduce electricity spend.
What are the benefits to businesses?
Forensic analysis concentrates on rectifying utility invoice discrepancies, reducing non-commodity energy charges, and enhancing the accuracy of business energy data through a detailed utility invoice audit, with a focus on non-commodity electricity costs. This process facilitates appropriate supplier invoice adjustments, leading to significant refunds and sustained ongoing cost savings for organisations.
Non-commodity savings directly improve a businessโs financial performance. Additionally, analysis of non-commodity charges provides businesses with critical budget insight into how regulated network costs, policy levies, and other energy-related taxes are changing and evolving within their overall energy spend.
How Can NUS Support?
NUS assesses a businessโs profile and conducts a detailed utility invoice audit to identify charging errors (both historical and current), and non-commodity charge options, exemptions, and tariff opportunities.
Where NUS identifies opportunities to reduce or eliminate one or more non-commodity cost items, we provide a detailed report outlining the findings, cost recovery potential, and practical implementation support where necessary to secure refunds and deliver ongoing energy cost savings.
Contact us online or find your local NUS office for more information.