Why residential flats are billed on commercial electricity rates and how landlords can fix it
If you own or refurbish older properties, especially ones that were once shops, offices, or mixed-use buildings, you might have noticed something frustrating: the property looks residential, but the electricity is being billed at commercial rates.
Commercial electricity often comes with higher standing charges, different tariffs, and 20% rather than 5% VAT. For landlords operating on a rent inc. bills model, these extra costs can quickly eat into profits, and if landlords pass the electricity costs on to tenants, it can result in unfairly high bills unless managed carefully.
The real driver of these unexpectedly high bills is the MPAN registered on the National Electricity Database, the official record that determines whether a supply is billed as domestic or commercial.
What is an MPAN and why does it matter?
Every electricity supply in the UK has a unique number called a Meter Point Administration Number, or MPAN. Think of it as the property’s official ID in the electricity system.
The MPAN lives on the National Electricity Database, which records details about the supply, including:
the location of the property
the current supplier
the classification of the supply
whether the supply is considered domestic or non-domestic
According to UK electricity supply regulations, including the Distribution Connection and Use of System Agreement (DCUSA), suppliers charge based on the MPAN registered on the database, not on how the building is actually used.
So even if you’ve converted a property into flats or a single-family home, the MPAN might still be registered as commercial. That means suppliers continue to charge business rates, because the system doesn’t automatically update to reflect renovations or changes of use.
How to change the MPAN
Check your MPAN and billing: Look at your bills for commercial/ business labels or unusually high standing charges, VAT or tariffs.
Contact your supplier: Explain that the property is residential but appears billed as commercial. Ask for a review of the MPAN classification.
Provide supporting evidence: Council tax letters, planning documents, or tenancy agreements can help.
Assess meter requirements: The supplier will determine if the existing meter setup can be reclassified, or if new meters and MPANs are needed.
Consider costs and solutions: If meter work is required, get a written quote. If costs are prohibitive, sub-metering may be the most practical option.
The challenge of a single MPAN covering multiple flats
Even when a building is clearly residential, suppliers cannot always reclassify the electricity supply as domestic. In many cases, this is because the building is supplied through a single MPAN covering multiple flats.
To create new MPANs for each flat, several parties are involved:
Distribution Network Operator (DNO): Only the DNO can issue new MPANs, as each represents a separate connection to the electricity network.
Energy supplier: Your supplier acts as the intermediary. They request the new MPANs from the DNO and will manage the accounts for billing.
Meter Operator (MOP): The DNO and energy supplier coordinate to create new MPANs and appoint a Meter Operator (MOP) to install meters for each flat. This process can be expensive, as it often requires significant re-wiring work to provide individual connections to the electricity network.
For many landlords, the expense of getting a new MPAN for each flat is prohibitive, especially in larger blocks.
A practical alternative: sub-metering
If full MPAN reclassification and rewiring to give each flat its own connection are too costly or impractical, a utility service like MyUnit provides a more cost-effective solution:
Sub-meters are installed in each flat to measure individual usage.
The main supply can remain on the existing commercial or single MPAN.
Tenants are billed fairly for what they use, and standing charges are shared proportionally. For example, if a commercial standing charge is £11 per day across 21 flats, the charge per flat would be around 52p per day, roughly in line with what a typical residential standing charge might be.
This approach can be faster, simpler, and more cost-effective for landlords managing residential blocks supplied under a single MPAN. At the same time, it ensures that electricity costs are fairer and more affordable for tenants.