What makes up the unit cost of electricity?
Even though energy bills keep rising year on year, wholesale electricity costs remain stable. This is because the make up of a fully fixed electricity price has changed. At Balanced Energy, we feel it is critical this is explained to customers.
Typically, only 35% of your bill is the cost of the wholesale electricity. The other 65% is made up of what we call 'non energy costs'. These costs are made up of 7 components which have been driving electricity prices up over the last decade.
Energy suppliers have no control over these costs. They are passed onto them via the network providers and regulator.
Here's is a snapshot of what these components are and the impact they have on your bill (mapping the cost from generating the power, carrying that power across the country, getting it to your meter and then finally the cost of how the electricity is used, which translates into the fixed unit price you pay).
CMSC- Capacity Market Supplier Charge
Pays for maintaining and developing the electricity capacity network. Medium impact on your bill
RO – Renewables Obligation
Pays for supporting renewable electricity generation. High impact on bill
CFD – Contracts for Difference
Pays for supporting low-carbon electricity generators. Medium impact on your bill.
TNUoS – Transmission Network Use of System
Pays for maintaining and upgrading power lines that carry electricity to local distribution stations. High Impact on your bill.
DUoS – Distribution Use of System
Pays for maintaining and upgrading power lines that carry electricity from local distribution stations to homes and businesses. High Impact on your bill.
BSUoS – Balancing Services use of System
Pays for incentivising generators and large businesses to increase or decrease energy consumption to help the National Grid balance generation and demand across the country. low impact on bill.
FIT – Feed-in Tariff
Pays for small scale renewable generation such as domestic solar installations. Medium impact on bill.
All suppliers have to pay these charges, the difficulty customers have is that all suppliers charge them in a different way. Whether it is a fully fixed unit rate, partially fixed with the ability to reconcile charges, or completely passed through additional charge on your bill.
We feel it is fundamental that customers understand and have complete transparency when negotiating and agreeing to electricity contracts.
Balanced Energy is here to help you get the energy contract that is right for you and your business.