Breakdown of a UK Business Electricity Bill

As one of the UK’s cheapest business electricity suppliers, it pains us to say this, but the fact is that business electricity bills have increased in price by around 43% in the past ten years. But what has led to this rise? Is it really due to wholesale price rises, as the top six energy providers claim?

Let’s take a closer look at a breakdown of an average business electricity bill, and see how much the components of your bill may cost (in kWh).

What are the three key components of a business electricity bill?

A business electricity bill can be broken down into three main parts, which are:

• Commodity costs (also known as wholesale costs) – 33%
• Non-commodity costs (also known as government costs) – 33%
• Non-commodity systems and transmissions costs (from the National Grid) – 33%

Now, let’s break these down even more

Commodity Costs / Wholesale Costs

In actual fact, the wholesale cost of electricity has remained fairly stable over the past ten years, although prices have fluctuated through different seasons. When this blog was written, the year-ahead price was £55.73MWh which is 5.6p p/kWh which is not far off the average price in 2010.

However, making sure your business is on a suitable tariff by switching to D-ENERGI and the cheapest business electricity prices we offer, can help you save money regardless of wholesale cost fluctuations – especially if you are on a fixed-rate contract.

Non-commodity Costs

You probably didn’t know this but a third of the cost of your business electricity bill goes to the UK Government to pay for environmental initiatives. There are five key components that go into these charges, and these are:

• Capacity Market – annual auctions for the capacity to be provided by power stations, demand-side response, and energy storage
• Climate Change Levy – designed to reduce carbon emissions and improve energy efficiency – and only payable by businesses
• Contracts for Differences (CFDs) – CFDs guarantee a fixed price for each MWH generated aka the ‘strike’ price. These are the current contract mechanism for low carbon generation
• Feed-in Tariffs – introduced to promote the installation of small-scale renewable and low carbon electricity generation – capped at 5MW
• Renewables Obligation Certificates (ROC) –support scheme for development of large-scale electricity generation

Non-commodity Transmission and Distribution Costs

The final part of the charges on your bill comes from the use and maintenance of the electricity transmission and distribution system, and typically include:

• Balancing Services Use of System (BSUoS) – costs that relate to the day-to-day operation of the transmission system which balances the grid
• Distribution Use of System (DUoS) – Cover the cost of distributing the electricity to the system
• Transmission Network Use of System (TNUoS) – The cost associated with transmitting electricity from power stations to grid supply points via the high voltage (HV) transmission network.

If you are looking for the cheapest business electricity rates UK, then switching to D-ENERGi can help. Contact us today to find the most suitable tariff for your business.