Energy costs are rising across the public sector, and tight budgets mean over-paying on any element of a utility bill can make a big impact on the bottom line. Whilst focusing on ways to reduce energy costs and drive down consumption are essential ways to mitigate against increasing prices, the NHS could also uncover significant savings simply by checking for errors on their utility bills.

One in five energy invoices contain an error – recent analysis by energy consultancy Inenco estimated that non-domestic energy users could be owed half a billion pounds thanks to inaccurate billing – with £112 million each year attributed to the public sector.

The energy billing structure is complex, and NHS Trusts are often subject to erroneous charges: with multiple sites and hundreds of gas and electricity meters, Trusts create masses of data and large margins for error across the energy supply chains. Over a third of errors identified in Inenco’s analysis were simple billing errors, which can go unnoticed for years, meaning many Trusts could be overpaying at a time when every penny counts.

Inenco’s analysis found that 42 per cent of billing errors were attributed to the wrong application of taxes, levies and the non-commodity elements of an energy bill. The increasingly complex nature of energy charges means a significant level of expertise is needed to understand the complex billing structure, from interpreting the different charges to understanding why some costs vary depending on the time of day energy is consumed.

Clawing back charges

Historical bill audits often uncover significant errors, from erroneous charges and miscalculated taxes to incorrect consumption calculations. However, historical audits are typically conducted every two to three years, yet identifying errors within financial year is crucial to avoid overpaying suppliers and clawing back budgets.

Ongoing invoice validation identifies errors swiftly and recovers all anomalies, including smaller issues that can be missed out in audits looking for ‘big ticket’ items.  Small charges can add up over time to large chunks of unnecessary cost, meaning it pays to catch all errors early and continually rather than a periodic check. Inenco worked with one NHS Trust to complete a thorough investigation into historical and current billing, identifying refunds and ongoing savings, from refunds on closed sites and exemptions on some costs to securing VAT reductions on residential units. In total, the project resulted in savings representing five per cent of their total spend.

Act within financial year

Invoice validation can begin immediately, from historical audits to a monthly review where bills are checked and corrected in an ongoing process that can result in refunds within the current financial period.

Inenco has created a special report on reducing cost and energy spend in the NHS, with case studies and practical advice for anyone responsible for energy management or purchasing in their organisation. To download a copy, visit https://www.inenco.com/nhs-trusts/ or email nhs@inenco.com to find out how your organisation could stem increasing energy costs and benefit from better prices.