How many of you actually know what your business energy bill consists of?

By Hudson Lancaster Ltd

17 Sep 2019

energy-bill-breakdown-img.jpg

Having recently written about the CCL on commercial energy bills I thought it would be good move to breakdown a business energy bill in full so you can fully understand what your business is paying for each month.   

The typical commercial energy bill in the UK has risen by over 40% over the last 10 years, with energy suppliers claiming that wholesale prices are to blame. Although partially true it’s not wholesale that we should be looking at; non-commodity charges equate to over 65% of your annual bill, included in this are the ever increasing government levy’s which have increased by over 165% since 2014 adding £540 per year to a small business consuming 20,000kWh pa, this is just on the electricity bill. 

SSE one the UK’s biggest electricity suppliers have broken down the bill into 3 sections which break down further into a number of sub sections.

Commodity Cost (wholesale) Non- Commodity Policy cost (Government Levy’s) Non-Commodity systems and transmission costs (Supplier or grid costs)

These breakdowns roughly account for 33% for each section of the bill. 

Commodity cost (wholesale)

Wholesale prices at the moment are pretty steady and low with gas being at £39.31 p/therm and electricity being at £44.96 p/kWh as of 1st April 19. With energy suppliers anticipating prices rises in wholesale throughout the next year I expect to see these figures rise. It’s not wrong to assume that although the wholesale prices are low now, the 40 plus retail price rises we have seen so far in 2019 are down to the suppliers anticipating this cost going up by quite a chunk, which is why fixed term contracts are going up in price fast.

I would advise that if you have a contract due to end within the next 6-12 months the time to lock in your new contract is now!

Non-commodity Policy cost (Government Levys)

Everyone’s favourite section of the bill, I’m sure. This is where things get more complicated and expensive. The levy’s applied to energy bills are the fastest rising costs associated, like I said previously, 165% since 2014... So let’s have look at what these breakdown to.

CCL (Climate Change Levy): This was introduced in April 2001 and only applies to businesses. It is used as an incentive for businesses to become more energy efficient by reducing your consumption you can reduce the amount of Climate change Levy that you pay.  Fit’s (Feed In Tariffs): This Scheme is a government programme designed to promote the uptake of renewable and low-carbon electricity generation technologies. FIT consumer payments last for 20 years.  CM (Capacity Market): Capacity Market are annual auctions for capacity to be provided to power stations, demand side and energy storage needed to keep up the security of the supply. ROC’s (Renewable obligation certificate): A support scheme for the development of large-scale renewable electricity generation. The RO closed to new renewable generation in March 2017 with subsidy payment continuing for another 20 years. CFD’s (Contracts for Difference): this is the current mechanism used for low carbon generation. Contracts for difference guarantee a fixed price for each MWh generated. CFD’s are auctioned and budgeted by the government.

Non-Commodity transmission and distributions costs

The charges that are included in this section of the bill are for the use, maintenance and transmission/distribution. This usually consists of the following:

Transmission Network Use of System (TNUoS): The cost associated with transmitting electricity from power stations to grid supply points via the high voltage (HV) transmission network. Balancing Services Use of System (BSUoS): Costs relating to the day-to-day operation of the transmission system, for balancing the grid. Distribution Use of System (DUoS) charges: Applied by regional utilities that manage the distribution network to cover the cost of distributing electricity to premises.

Some suppliers will allow you the option to have these costs split and shown separately from the wholesale price.

I think it’s safe to say that you never thought your energy bill would be quite so complex but I believe that it is important that you know where your money is going. Energy is one of your businesses biggest expenditures and one that is essential in the day to day running of it. I hope this article helps somewhat give you a better understanding of what your energy actually costs, I look forward to telling you how you can reduce it with some simple and helpful tips over the coming months.

About Us: Hudson Lancaster Ltd, are commercial energy brokers based in Lancashire specialising in not only finding the best tariffs to suit your business but also working with you to reduce your consumption making your business more sustainable. 

Latest news

1

Three weekly domestic waste collection considered in plans Waste recycling Blackpool

Three weekly domestic waste collection considered in plans

01 Jul 2025

2

Graham Engineering confirms acquisition to a2e Industries Graham Engineering

Graham Engineering confirms acquisition to a2e Industries

01 Jul 2025

3

Training 2000 celebrate 'Good' rating by Ofsted Training 2000

Training 2000 celebrate 'Good' rating by Ofsted

01 Jul 2025

4

Fox Group acquires J Fisher and Sons Colin Fisher, Paul Fox CEO and Gary Fisher.

Fox Group acquires J Fisher and Sons

01 Jul 2025

5

Beever and Struthers strengthen leadership team with new partners Dean Curtis and Joe Diston

Beever and Struthers strengthen leadership team with new partners

01 Jul 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV123 July/August Launch Event
Lancashire Business View magazine launch
Networking
16 Jul 2025

LBV123 July/August Launch Event

Burnley

08:30 - 10:30

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

Business Bike Club – July
Chamber Logo1.png.png
LBV Hub Networking
01 Jul 2025 - 01 Jul 2025

Business Bike Club – July

Various, Lancaster, LA

08:00 - 09:30

Chamber Breakfast Networking – July
Chamber Logo1.png.png
LBV Hub Networking
02 Jul 2025 - 02 Jul 2025

Chamber Breakfast Networking – July

St John's Hospice, Slyne Road, Lancaster, LA2 6ST

08:00 - 10:00

The Marketing Metrics that Matter – July 4
LBV Hub Seminars
04 Jul 2025 - 04 Jul 2025

The Marketing Metrics that Matter – July 4

Door4 Office, Burnley Wharf, Burnley, BB11 1JG

08:30 - 11:00

Tri-Site Survey Equipment Showcase
unnamed (2).jpg.jpg
LBV Hub Seminars
09 Jul 2025 - 09 Jul 2025

Tri-Site Survey Equipment Showcase

Crow Wood Hotel, Burnley, BB12 0RT

09:30 - 16:00

Chamber Summer BBQ
LBV Hub Social
17 Jul 2025 - 17 Jul 2025

Chamber Summer BBQ

The Borough, Dalton Square, Lancaster, LA1 1PP

17:30 - 20:00

Preston Tech Connection: Web3 is Dead. Or is It?
July Longer Banner.jpg.jpg
LBV Hub Networking
29 Jul 2025 - 29 Jul 2025

Preston Tech Connection: Web3 is Dead. Or is It?

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 19:30

Preston Freelancer Meet-Up: July
Longer July Banner.jpg.jpg
LBV Hub Networking
31 Jul 2025 - 31 Jul 2025

Preston Freelancer Meet-Up: July

Society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Cumbria Business Expo 2025
https---cdn.evbuc.com-images-880461633-4862066883-1-original.20241022-110415.jpeg.jpg
LBV Hub Exhibitions
19 Sep 2025 - 19 Sep 2025

Cumbria Business Expo 2025

Carlisle Racecourse, Carlisle, CA2 4TS

09:00 - 15:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV122 Online Graphic
Subscribe now

Weekly news bulletin