All energy bills are made up of commodity costs and non-commodity costs. A typical electricity bill will consist of around 45% non-commodity costs, with only 55% being commodity costs.
Depending on the energy supplier, and type of energy product, the non-commodity costs may be seperated from the commodity costs and shown on your invoice as a seperate line or simply included in the overall unit rates.
The non-commodity costs comprise of government originated charges and third party system charges. Examples of the government originated charges are as Feed in Tariff (FiT), Electricity Market Reform (EMR) and Renewables Obligation (RO). Examples of third party system charges are Distribution Use of System (DUoS), Balancing Services Use of System (BSUoS) and Transmission Network Use of System (TNUoS).
Unfortunately all of these costs have risen over the past few years. Depending on the individual charge, they are either forecast to continue rising or actually set in stone to be higher over the coming months and years.
The tables below illustrate the main charges and their fluctuation.
Feed in Tariff (FiT)
The Feed in Tariff is a government scheme designed to support small-scale renewable generation in businesses and homes. It was launched in 2010 and offers an index-linked payment for every kWh of energy produced for a 10-25 year period, with different rates for different technologies. The scheme is funded by suppliers based on market share, with costs then recouped from consumers.| Forecast Charges | Actual Charges | |
|---|---|---|
| 1st Apr 2014 to 31st Mar 2015 | 0.293 p/kWh | 0.339 p/kWh |
| 1st Apr 2015 to 31st Mar 2016 | 0.405 p/kWh | 0.445 p/kWh |
| 1st Apr 2016 to 31st Mar 2017 | 0.494 p/kWh | £ to be advised before 1st Jan 2018 |
| 1st Apr 2017 to 31st Mar 2018 | 0.547 p/kWh | £ to be advised before 1st Jan 2019 |
Renewable Obligation (RO)
The Renewables Obligation (RO) is a UK government scheme to support the development of large-scale renewable energy generation, in order to help meet the UK’s climate change objectives. It was introduced in 2002 and will close to all new generation contracts by April 2017, to be replaced by the Contracts for Difference scheme. However, existing RO contracts will continue to run until 2027. The RO is funded by suppliers, with costs then recouped from consumers.| Year | |||
|---|---|---|---|
| 1st Apr 2015 to 31st Mar 2016 | 1st Apr 2016 to 31st Mar 2017 | 1st Apr 2017 to 31st Mar 2018 |
|
| Renewable Obligation Rates | 1.286 p/kWh | 1.558 p/kWh | 1.882 p/kWh |
Contracts for Difference (CfD)
The CfD is designed to support investment in new low-carbon generation, with a technology-dependent fixed price known as the 'strike price' (wholesale price + top-up subsidy). The CfD costs will vary annually due to wholesale price fluctuations and amount of CfD generation produced in each year. CfD costs are met by a levy applied to energy suppliers, which are then be passed on to consumers.| Quarter | ||||
|---|---|---|---|---|
| Actual Charge | Forecast Charges | |||
| 1st Jan 2017 to 31st March 2017 | 1st Jan 2017 to 31st March 2017 | 1st Apr 2017 to 30th June 2017 | 1st July 2017 to 30th Sep 2017 |
|
| CfD Operational Cost Rate This charge is fixed annually | 0.005 p/kWh | 0.005 p/kWh | 0.005 p/kWh | 0.005 p/kWh |
| CfD Supplier Obligation Rate | 0.098 p/kWh | 0.096 p/kWh | 0.151 p/kWh | 0.155 p/kWh |
| Total Rate As shown on customer invoices | 0.103 p/kWh | 0.101 p/kWh | 0.156 p/kWh | 0.160 p/kWh |