What makes up an energy bill

There are many elements that make up a business energy bill. The unit rate(s) and standing charges only make up part of the total bill.

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Energy Costs

This is the cost that suppliers purchase the energy for and is reflected in the unit price they charge. This makes up the majority of your bill. Suppliers buy energy on the wholesale market and the price is constantly changing depending on the price of global commodities such as coal and gas. The suppliers will forecast the future wholesale costs, the usage their customers will likely use and set their prices based on this.

Network Costs

Network costs are often itemised on bills as the TUoS and DUoS charges. They represent the cost of transporting the energy over the network and the energy which is lost during transportation. These charges are outside of the control of the suppliers and are regulated by OFGEM.

Environmental Costs

All energy suppliers are required to contribute to certain Government Initiatives designed to help reduce their impact on the environment. These include environmental programmes that reduce carbon emissions, such as Renewables Obligation.

 

Climate Change Levy (CCL)

CCL is a Government-imposed tax to encourage reduction in gas emissions and greater efficiency of energy used for business. The tax is applied to your usage, and is applied only when electricity consumption exceeds 33 kWh per day during a bill period or 145kWh for gas. The CCL charge will be itemised on your bill. If your usage is at or below 33kWh per day for electricity or 145kWh per day for gas CCL will not be charged.

VAT

VAT is also a Government-imposed tax, which relates to the supply of goods and services. There are currently 2 rates of VAT applicable to supplies of electricity and gas – the standard rate and the reduced rate. The rate that will apply to your business depends on your usage, and will appear on your bill as a separate charge.