Understanding your costs
Understanding your Energy Costs
Wholesales energy costs
Is what we pay producers for either generating electricity at power plants or extracting gas through exploration and production.
Both gas and electricity need to be transported to their point of consumption – your business – and will involve a number of additional steps that include transmission and distribution. The transmission grid transports large volumes over long distances while the distribution grid “distributes” the gas and electricity locally to your business. Like motorways and county roads, the transmission and distribution infrastructure requires continuous maintenance and upgrades as to keep up with growing demand and regulation.
Environmental and social costs
The UK government has launched large infrastructure upgrade programmes to cope with projected growth of demand, to increase efficiency and to develop the renewable sector. All these contribute to the charges and levies that we pay.
Supplier operating costs
Includes our operational cost and the advance purchase of energy so as to lock in prices and remove risk.
This is established by HMRC and is usually 20% for businesses. There are special circumstances where the rate drops to 5%.
To learn more about your costs, download our two page guide:> Understanding Your Energy Costs