What costs make up your business electricity bill? To help you understand where these charges come from, we've put together this summary of costs for the average small business electricity bill as well as an explanation of each cost below.
A number of different elements contribute to the charges on your business electricity bill. Some of these come directly from purchasing the electricity you use, whereas others are government imposed taxes or operational costs involved with managing your account. These costs differ by region and by supply type, across different energy products and customer consumption levels.
What costs make up your business electricity bill?
To help you understand where these charges come from, we've put together this summary of costs for the average small business electricity bill as well as an explanation of each cost below.
This is the cost of the energy we purchase on the wholesale market, and makes up the largest individual part of our prices. Wholesale prices are changeable depending on the price of global commodities such as coal and gas. So that we can protect you against sudden price changes, we forecast your usage and use this to purchase your electricity for your future energy requirements.
Network costs work in a very similar way to your phone line rental, as it pays for the infrastructure required to deliver energy from the power station to your business. We pay fees (most of which are regulated by OFGEM) to use the transmission and distribution networks as well as a charge for any energy that is lost on the way.
As an energy supplier, we have to contribute to certain Government initiatives. 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 or non domestic purposes. The tax is chargeable on units (kWhs) used, and is applied only when electricity consumption exceeds 33 kWh per day during a bill period. You’ll see CCL as a separate charge on your bill. If your usage is at or below 33kWh per day, or you are supplied on our Renewable contract, CCL will not be charged.
Value Added Tax (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. For more detailed information about VAT and CCL, please view our helpful e-guide.
Operating costs and margin
These cover the costs that we incur as your energy supplier to keep your account running smoothly. These include everything from maintaining our IT systems, paying our staff, our overheads (such as running our buildings), and marketing. This figure also includes costs such as customer debt and balancing the amount of energy we buy (costs are incurred from buying too much or too little energy). The profit margin on our prices is typically very low and for some of our tariffs is actually zero. So that we can continue to develop and improve our products and services to our customers, much of the profit margin we do make is reinvested into our business.
Please note: If you have a Green Deal agreement in place, any prices or discounts quoted do not include your Green Deal payments.