What really makes up my energy bill?

A famous man once said there’s only two things in life guaranteed, “taxes and dying”. But, if you’re like the other 99% of the population, you can probably add paying an energy bill to that list.

So, like most businesses you probably check your bill at the end of each month and pay the required amount. However, how many of us understand what really makes up our final bill? And what are we truly being charged for?

Typically speaking, your charges will be split into two separate categories, commodity and non-commodity.

What’s the difference?

Commodity: The amount on your bill which reflects the actual energy you’ve used over a set period of time.

The commodity charge is often the most understood cost as most businesses, especially those who effectively manage their energy consumption, have an accurate idea of how much energy they’ve used.

Non-Commodity:  The non-commodity cost (often referred to as ‘third party costs’ by energy professionals) includes the extra charges that make up your bill but are not for the energy itself. These extra costs are traditionally broken down into the following categories:

  • Taxes and levies: The UK government imposes additional charges as part of their 2020 target of having 15% of energy generated from renewable sources. These include feed in tariffs (FIT), renewable obligations (RO) and capacity market (CM)
  • Network costs – These involve the cost of transporting the electricity both directly to the meter, and across both the transmission network and the local distribution network. These include Transmission Network Use of System (TNUoS) Charges, Balancing Services Use of System (BSUoS) Charges and Distribution Use of System (DUoS) Charges.
  • Supplier costs – Simply put, this is a small charge that covers the cost of actually delivering the energy to you.

How does any of this impact me?

Non-commodity costs have continued to rise over recent years with experts predicting they will account for up to 60% of your electricity bill by 2020.

These rising costs make one thing strikingly clear: it’s imperative that UK businesses ensure they aren’t overpaying on their energy consumption.

At GAS, we’re experts in working side-by-side with businesses to make sure you pay the lowest price possible. If you’re concerned about the rising price of your energy and would like a free consultation with one of our experts, then please contact us today on 0800 130 3514 or simply drop us an email.