Basic charges

 Unit Cost:

The unit rate is the price per kilowatt hour of gas / electricity. It is possible to have several different unit rates for electricity, depending upon the type of meter.

 Standing Charge:

The Standing charge is a fixed charge, which covers the transportation capacity costs, the meter asset charges and meter read charges. It covers maintenance and the cost of keeping the customer connected to the network.

 VAT:

The current business VAT rate is 20%. However, some businesses, such as charitable organisations and homes, may qualify for a reduced VAT rate of 5%.

Please see below link for more information:

https://www.gov.uk/vat-charities/what-qualifies-for-relief

Climate Change Levy (CCL):

The Climate Change Levy, is a tax on UK business energy use, charged at time of supply at a rate set by the government. It was introduced to help reduce greenhouse gas emissions and encourage energy efficiency in business. Should a business qualify for reduced VAT, they may also be eligible for exemption from CCL.

Other Charges

Feed-in Tariff (FiTs):

In April 2010, the government launched the Feed-in Tariff scheme to encourage homes and businesses to generate their own renewable, low-carbon electricity. This is done using solar photovoltaic (PV) panels, wind turbines and other renewable technologies.

Ofgem calculate the FiT costs for suppliers at the end of each quarter. All energy suppliers pay towards the FiT fund, based on their share of the energy market. As the costs for the FiT scheme have increased recently, the suppliers have passed on the costs to consumers.

 Renewable Obligation (RO):

The renewables Obligation was introduced by the government as an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources. This is to build a sustainable energy future.

The RO charges on bills are comprised of two elements; the Obligation level charge and the Buy-out-price. The cost is calculated on the energy used.

Contract for Difference (CfD):

Contract for Differences is a long-term contract between an electricity generator and the Low Carbon Contracts Company (LCCC). The contract ensures the Generators receive a fixed price for low carbon generation, providing greater certainty to those investing in new technologies.

Under the CfD, payments can flow from the LCCC to the generator and vice versa. When the market price for electricity generated by the CfD generator is below the Strike Price, payments are made by the LCCC to the CfD Generator to make up the difference. However, when the reference price ice is above the Strike Price, the CfD Generator pays the LCCC the difference.

As the subsidies payable to renewable generators are collected from Suppliers, this cost is passed onto the consumers.

Capacity/Availability Charge (kVa):

A capacity charge is based on the ‘peak’ energy used during a specific period. It’s a charge from the grid operator to have the capacity to meet the peak demand, regardless of how little this may be. Depending on location, this may be a monthly charge, or an annual charge.

Excess Capacity:

This charge is for the consumers who use more than their contracted capacity.

Meter Operator (MOP):

MOP charges are for HH meters and cover the supply of the meter, maintenance and the necessary telecommunications for sending consumption data to the chosen energy supplier.

Meter operator charges can also be charged on a separate agreement to a contract, this is called a MOP agreement/contract.

Distribution Use of System (DUoS):

This is a charge to consumers which covers the cost of receiving electricity from the National Transmission System feeding it directly into homes and businesses through the regional Distribution Network Operators (DNOs).

 Transmission Network Use of System (TNUoS):

This is a charge to consumers to cover the cost of using the National Transmission System, owned and operated by National Grid. It covers the costs of delivery of electricity from power stations into and across the transmission network.

 Balancing Services Use of System (BSUoS):

Is a charge to the consumer to allow National Grid to recover the money it costs to balance the electricity system which needs to be done every second of every day. This maintains the quality and security of the electricity supplies.

Reactive Power:

Reactive Power is the difference between working power (active power measured in kW) and total power consumed (apparent power measured in kVA). Some electrical equipment used requires an amount of ‘reactive power’ as well as ‘active power’ in order to work efficiently. If a site has high Reactive Power, more current has to flow in order to provide the same output. To do this, more capacity has to be provided, increasing the costs to the Distribution Network Operator (DNO). Therefore, the costs are passed on to the consumer.

Fossil Fuel Levy (FFL):

This is a charge paid by suppliers of electricity from Non-renewable energy sources in the United Kingdom. The costs are passed onto consumers by the suppliers.

 Triad Demand:

The Triad refers to the three highest half-hour settlement periods of system demand between November and February each year, typically occurring during cold weather around 5 -6pm, when industrial demand coincides with domestic tea-time.

National Grid uses the Triad to determine charges in accordance with the Statement of Use of System Charging Methodology for demand consumers.

 Data Aggregator Charge/Data Collection Charge:

Suppliers charge for data collection/aggregation to maximise accuracy and minimise the risk of data issues affecting the supply bill.

ELEXON Fixed Charge/ ELEXON Variable Charge:

ELEXON is the Balancing and Settlement Code Company who provide and procure services to administer and implement the balancing and settlement rules. ELEXON charges are levied to recover the costs of running ELEXON.

 Other charges which my be present on bills include: Hydro Surcharge, Communication Charge, Green Charge, Ad Hoc charges, Pooling and Settlement Charge. Please check with the incumbent supplier for further explanations of charges.