What do we do?
EDF Energy is one of the largest energy companies in the UK, supplying around 6 million residential and business accounts with electricity or gas. We produce around one-fifth (20%) of the nation’s electricity and that makes us the largest supplier by volume - something we’re really proud of.
EDF Energy is part of EDF Group, a leading global electricity company which began investing in the UK in 1998. Today, EDF Energy employs over 15,000 people across the UK - from Torness in Scotland right down to Exeter in Southern England.
Generation and Supply
Within EDF Energy there are two separate businesses: one that produces electricity, called a generation business, and one that buys gas and electricity from the wholesale market to sell onto our customers. We call this our customer supply business.
The generation business operates the power stations that produce electricity. This goes directly into the National Grid to be transmitted throughout the UK.
The gas infrastructure works in a similar way using pipelines. However, EDF Energy doesn’t actually produce gas; we buy it from the wholesale market to supply to our customers.
The wholesale market
This brings together companies producing electricity and gas with energy suppliers who need to buy it to meet their customers’ needs.
We buy and sell gas and electricity in advance to ensure we can meet our customers’ demands. In order to do this, we have to predict how much our customers will need over a period of time. However, things can change which affect this, such as changes in the weather or if a power station develops a fault. Therefore we are constantly adjusting what we buy from the wholesale market.
All the gas we supply our customers comes from the wholesale market and most of the electricity we supply to our customers does too. Whenever we buy energy we’ll always pay the market price - even if it’s from our own generation business.
We buy and sell energy up to three years ahead and this helps to even out prices over time and cushion customers from dramatic swings in prices. It also means we can offer fixed-priced tariffs over several winters.
Supplying our customers at home and work
Our residential customers can choose two types of energy tariff: fixed or variable. Just like mortgages, fixed tariffs guarantee that the energy price won’t change for the length of the deal. With a variable tariff, prices can go up or down at any time.
Our business customers fall into two categories: small and medium-sized enterprises, known as SMEs, and larger businesses. As with residential, our SME customers have a choice of tariffs and contracts, whereas our large business customers usually negotiate their contracts on an individual basis.
We think it’s the right thing to do to keep our prices as low as we can for customers. This means keeping a close eye on what it costs to supply gas and electricity to homes and businesses.
The cost of buying electricity and gas makes up around half of our residential bill. The other half includes things like operating and network costs, and government obligations. In 2013 EDF Energy Customers PLC made a loss from supplying residential customers. You can see a breakdown of the costs we incurred in 2013 in the illustration above.
When EDF Energy wants to buy or sell energy on the wholesale market it will ask EDF Trading to perform this function on its behalf. Essentially, EDF Trading acts as the agent through which these trades are conducted. It’s a role it performs not only for EDF Energy in the UK but across the global EDF Group. In some instances, EDF Energy may conduct the role of trading themselves. Check out edftrading.com for more information on how they operate.
Meeting customer demand
The amount of electricity and gas our customers use is measured in units or kilowatt hours (kWh), with one unit working out as one kWh. Typically, watching TV for four hours costs around 14 pence of electricity and 3 minutes of a hot shower costs 4 pence of gas*. Find out how much electricity certain household appliances use and find out about saving energy in general.
*Prices are correct as of 5 June 2014. Examples are based on the national average of our Standard (Variable) Direct Debit unit rate prices (incl VAT) for a standard metered customer.
Demand for energy varies over the course of the day, for instance first thing in the morning as people are getting up. In winter, as it’s darker and colder, residential customers use nearly twice as much electricity and over three times as much gas as they do in summer. Electricity isn’t easy to store, so when we source our supply we need to make sure we have the right amount to meet potential demand.
Our Energy Mix
To provide a secure energy supply for the future, the UK needs a diverse mix of energy sources. But the closure of old power stations, declining resources of known oil and gas in the North Sea and the need to tackle climate change means we face a potential energy gap.
No single energy source - whether its nuclear, renewable, coal, gas or hydro - offers a complete solution to meeting our long-term energy needs. Together though, the different sources can compensate for each other’s limitations.
To secure the UK’s energy future, our energy mix has to reflect the need for low-carbon emissions, a secure supply and affordability for customers.
Openness and transparency
These are two key values that drive our business and help us to stand out as the Feel Better Energy Company. In March 2012, our Chief Executive, Vincent de Rivaz, made three promises to our customers: to deliver fair value, better service and simplicity. You can read about our Customer Commitments here
These Customer Commitments represent our dedication to putting customers first. They are also a public acknowledgement of our responsibilities as an energy supplier and a producer of electricity.
EDF Group - which operates in countries around the world - publishes details of its financial performance twice a year. These financial results relate to its entire global business and include details of EDF Energy’s performance here in the UK.
Each year we give the Office of Gas and Electricity Markets (Ofgem) a breakdown of how our generation and retail businesses have performed over the previous 12-months in terms of profits and losses. We also put this information on our website.
In 2013, our annual segmented accounts show we made a combined operating profit of £926m from our generation and supply activities. Our residential business made a loss of £90 million from selling gas and electricity to our customers.
How do we spend our money?
Policy and Regulation
The Office of Gas and Electricity Markets (Ofgem), is the independent regulator for the electricity and gas industry. Ofgem is responsible for protecting the interests of consumers, including promoting a secure and sustainable supply, and supervising and developing markets and competition.