Reduced energy prices – how much will you actually gain?

With the widely reported reduction in wholesale energy prices and the clamour to get the suppliers to reflect these reductions in their prices, just what benefit will you gain from this?

Not all of what you pay in your energy bill is made up of the energy you use, in fact there are a number of charges that make up your final bill. So what do your energy costs consist of?

Raw energy – the stuff you actually use!

Third party charges – these are charges that cover getting the energy to you through the network, the cost of energy lost whilst being transported to you (!), the cost of installing and maintaining your meter, and the cost of having that meter read.

Taxes and levies – those that you know such as VAT, and those that you may not be aware of such as climate change levy (CCL), and Feed-in tariff scheme (FiT).

Supplier costs – covering the cost of marketing to you and keeping you happy (!!) as a customer

So, how much of your final cost is made up from each of these areas. The largest area is that of the raw energy which accounts for over 40% of what you pay, next is the third party charges which is about 30% of your bill, with the remainder being split between taxes, levies, and supplier costs.

Based on this make up of each and every bill a drastic reduction in the wholesale energy costs being applied to your bill may sound great but the reduction will only be in your raw energy costs. The rest remains the same – or may increase!

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