Your gas and electricity charges are self-explanatory, but what about the other individual costs stated on your energy bills?
Wholesale energy cost
Energy suppliers don’t make the energy themselves; they need to buy it from wholesale suppliers. They buy this energy in advance to ensure they don’t run out of it during your contract term. The wholesale energy cost is the amount your business has to pay to help cover the cost of the energy and will be the biggest component of your bill.
Distribution Use of System (DUoS) charge
This covers the cost of the installation and maintenance of local electricity distribution networks. The companies that maintain these distribution networks set the cost of the DUoS charge.
Transmission Use of System (TNUoS) charge
Similar to the DUoS charge, the TNUoS charge goes towards maintaining the national grid. It also helps cover the costs of the transportation and distribution of your electricity and gas.
Climate Change Levy (CCL)
You’ll be charged a high Climate Change Levy bill if you haven’t made any serious attempts at making your business more energy efficient. This charge is designed to make companies move towards more energy efficiency. If you have started making your energy usage habits more energy efficient, then you may be exempt from this bill. For example, using renewable energy may make you exempt.
You’re charged this to cover the cost and maintenance of your gas and electricity meters.
You’ll also be billed for VAT on the energy you use. Businesses are normally charged 20%, however, this depends on how much energy you actually use. For example, if you use less than 145 kWh of gas, then you may only be charged 5% VAT.