Understanding Your Business Electricity Bill

understanding your busness electricity bill


While it’s important to ensure you are getting the best deal for your business electricity supply, it is also important that you understand your electricity bill when that supply commences. Whilst you may use a business electricity broker to arrange your energy supply, they may not be on hand to check your bills (which electricity bill brokers would do for you for example). So not all business gas and electricity brokers are the same!

You might think that the costs you are charged on your business electricity bill is the cost of the energy you have used? That is only partly true! In today’s everchanging environment, government policy has a major impact on the prices you are now paying!

The actual wholesale cost of the electricity is also known as the commodity cost and out of your total electricity bill this will represent only around 40%. So, what’s the rest of your electricity bill made up of?

The Non-commodity costs (also known as third-party costs) proportion has significantly increased over the last few years to the extent that they now represent 60% of the total electricity bill. The main constituent parts of the non commodity costs that are charged via your electricity supplier are:

  • The cost of the national transmission and distribution networks – your local Distribution Network Operator’s (DNO) charges together with the Transmission System Operator’s (i.e. National Grid) charges make up nearly a quarter of the overall costs.
  • Environmental levies – these include levies such as Renewable Obligation (RO) and make up nearly 10% of the overall costs.
  • Supplier operating costs – these costs will be the normal costs the supplier bears to run their business under the supplier licence granted by Ofgem and will include such costs as operation of their customer service function and the maintenance of their billing platform for example.
  • Taxes – Vat and the Climate Change Levy (CCL) are regularly feature on most business electricity bills. CCL is charged on certain sources of energy and to certain business sectors. There are exemptions and reductions available too.

If you are unsure whether you are paying the right amount for your business electricity, give Central Power a call on 01746 335346 and we can discuss how we can assist you. We are an established electricity broker for over 25 years and our clients have been with us for many years too, a testament to the services we provide!

Tarsem Dhamrait


Image source: Unsplash

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