Skip to main content
Menu

What costs make up your gas and electricity bill?

Here we explain:

  • What costs make up your electricity and gas bills
  • Why energy prices change
  • Which products and services we're offering to help keep bills down

 

Understanding what costs make up your energy bills

We'll explain what costs make up your bill and what can impact these. 

The story of your energy: from generation to your bill

It's easy to forget all the different processes and activities it takes to get the energy to your home and then how they're covered in your bill

1. Energy companies produce electricity and extract gas

2. Prices for energy on the wholesale market can go up or down, depending on global supply and demand

3. We can't control wholesale electricity and gas prices, but offer customers a range of tariffs with fixed or variable prices

 

4. We add the extra costs that all of the major energy suppliers face, including.....

Supporting government initiatives …

… including obligations like smart meters…

… as well as our support for vulnerable customers and customer services

5. We power your home

What do energy bills include?

Wholesale costs make up the largest part of your energy bill. Other costs include network, policy and operating costs – these help us maintain the network and contribute towards a net zero future by supporting government low carbon initiatives. These pie charts show the current breakdown.

Wholesale costs

Our gas and electricity costs are determined by the prices on the wholesale markets in the UK, which in turn reflect global commodity markets. As with things like petrol, the cost of energy goes up and down with global availability and demand.

Network costs

We don't own the electricity wires or gas pipes the energy flows through, so we must pay the companies that do. This money goes towards maintaining, running and upgrading the networks.

Policy costs

As Britain’s biggest generator of zero carbon electricity(1), we've never been busier helping cut UK carbon emissions to nothing. We also support the government in funding renewable energy and helping vulnerable customers. Our efforts to be a more sustainable and responsible energy supplier have been recognised by a wide range of organisations.

Operating costs

These costs cover running our call centres, sending your bills and reading your meters. We’re always looking for new ways to keep these costs as low as possible. For example, MyAccount and our mobile app, which lets you view and pay bills, send us meter readings or amend your Direct Debit details – all online.

VAT

This is set by the UK government at 5% on all home energy bills. It’s much lower than the standard 20% which you pay for items in a shop, for example.

Why are energy prices rising at the moment?

Wholesale prices

Wholesale energy costs make up between 40 – 60% of your energy bill, and changes in the costs tend to be the main reason for energy prices going up or down.

While we hate putting prices up, sometimes this is also necessary. When wholesale prices fell in 2020, we cut Standard (Variable) tariff customers' prices by an average of £100 a year.(2)

So why are wholesale prices going up?

  • As we recover from Covid 19, demand for energy especially from businesses has gone up, driving up the price
  • The last winter was colder than average in Europe and Asia, which increased the global demand for gas and reduced global gas reserves
  • Russia's invasion of Ukraine has reduced the amount of gas being supplied to the European energy markets
  • Rises in gas wholesale prices have a knock-on impact on electricity costs, too, due to the impact on the cost of gas-fired electricity generation

 

Green levies and other taxes

Increases in bills can also be because of higher taxes and levies the government imposes on energy companies. Green levies will not be applied whilst the Government Energy Price Guarantee is in place.


Investment in the National Grid

Bills need to cover repairs, replacements and upgrades to the National Grid. This is similar to the way rail tickets help to fund upgrades to our railway infrastructure.

What to do if you’re worried about paying your energy bill

We appreciate this is a really difficult time. If you are struggling to pay please find out all the support that is available to keep on top of your payments. 

Options include:

  • having a smart Pay As You Go meter installed can you manage your energy budget
  • paying less, more often - if you currently pay your bills quarterly why not consider monthly payments by going to MyAccount
  • extra support through our Priority Services, for those who need it
  • how to access independent advice and support - visit our help centre

 

If you pay by Direct Debit, we advise you don't cancel your Direct Debit payments or stop paying your bills without contacting us. It's likely you're paying less for your energy if you pay by Direct Debit so stopping it will likely increase your energy charges. Head to our help centre to find out more advice on Direct Debit.

Other ways our customers are making savings

Join our customers who are cutting their usage and bills

Having control over your energy consumption is easier than ever with a smart meter and our free Energy Hub(3). Keep a close eye on your usage patterns, reduce your carbon footprint and possibly save on your bills.

Book your installation now

Already have a smart meter? Sign up to Energy Hub

EDF smart meter energy hub home screen

Want lower energy bills - act now to help save you money this winter!

Here are the savings insulation can save you on your bills each year.

Cavity wall and loft insulation together can save you up to £870 per year on bills(4)

Customers can get help with insulation costs through the Great British Insulation Scheme

Advice on what you can do at home to save energy

With the continued cost of living crises, there's never been a better time to cut your energy bills and be kind to the planet. We've put together some tips to help you and your family reduce the energy use in every room of your home. Read our tips on energy saving at home. Some of these are easy to do and completely free.