How does the pricing structure work for flexible energy contracts, and are there any hidden fees or charges?

Flexible Energy Contract Charges and Fees for ONLY your Electricity bill:

1. Commodity Charge:

  • This covers the wholesale energy consumed, fluctuating monthly based on trading activities.

2. Imbalance Charge:

  • Reflects the cost of forward transactions and determines the daily cost of energy arising from unsecured volume.

3. Daily Standing Charge:

  • Contributes to installation, maintenance, and administration costs for the local Distribution Network Operator (DNO).
  • Published by DNO – revised every April and sometimes October.

4. Capacity Charge:

  • Applies for Agreed Supply Capacity (ASC) with the DNO, measured in kVA.
  • Published by DNO – revised every April and sometimes October.

5. Super Red, Red, Amber, and Green Unit Charges:

  • Distribution charges based on consumption during peak, intermediary, and off-peak times.
  • Super Red charges are for Extra High Voltage (EHV) sites.
  • Published by DNO – revised every April and sometimes October.

6. Reactive Power Charge:

  • Applied if excessive power is wasted, contributing to offsetting distribution network costs.

7. Excess Capacity Charge:

  • Penalty for exceeding Available Supply Capacity (ASC).
  • Collected by the supplier on behalf of the network operator.

Transmission Charges:

8. TNUoS (Transmission Network Use of System) Charges:

  • Levied on all HH electricity users for transporting electricity from power stations to Distribution Networks.
  • Monthly accrual for Triads during November to February.
  • Recouped at the end of March, subject to reconciliation in April/May.

9. RO (Renewables Obligation):

  • Suppliers must source a proportion of electricity from renewable sources, with costs passed on through the RO charge.
  • Discount for Energy Intensive Industries (EII), published by BEIS and Ofgem – revised every April.

10. FiT (Feed-in Tariff scheme):

  • Incentivizes investment in small-scale electricity-generating devices.
  • Costs funded by suppliers, with potential discounts for Energy Intensive Industries.

11. CfD Operational Levy:

  • Covers operational costs for the Contracts for Difference (CfD) scheme.
  • Published by Ofgem – revised annually.

12. CfD Interim Rate Levy:

  • Supports low-carbon generation, providing price stabilisation for new generation.
  • Levy details published on relevant websites.

13. Capacity Market (CM):

  • Ensures electricity supply during peak demand through CM Settlement Costs Levy and CM Levy.
  • Levy details published by Ofgem and revised annually.

14. Renewable Premium:

  • Applied to consumption under a ‘Green Energy’ contract.

15. BSUoS Estimate (Balancing Service Use of System):

  • Incurred by National Grid for balancing the national transmission network.
  • Residual Cash flow Reallocation Cash flow (RCRC) may be included.

16. Elexon Settlement:

  • Manages financial aspects of day-to-day settlement.
  • Published by Elexon – revised monthly.

17. AAHEDC (Assistance for Areas with High Energy Distribution Costs):

  • Covers the cost of supplying electricity to remote areas.
  • Published by National Grid – revised annually in April.

18. DC and DA Charges (Data Collector and Data Aggregator):

  • Set charges for managing and monitoring electricity consumption data.

Flexible Energy Contract Charges and Fees for Electricity and Gas Supplies:

1. Shape Fee/Swing Premium:

  • covers the cost of purchasing electricity for your residual volume, which is the difference between your Agreed Baseload Volume (ABV) and your forecast consumption for that supply period

2. SYSTEM LOSSES CHARGES:

a. Losses:

  • Accounts for energy lost through heat (electricity) and shrinkage (gas).
  • Losses for electricity can be uplifted to consumption or charged separately.

b. Transmission Losses:

  • Charges for electrical losses during transmission from generation source to grid supply point (GSP).
  • Published by Elexon – revised daily.

c. Distribution Losses:

  • Charges for electrical losses during transmission from GSP to meter, determined by Line Loss Factors (LLF).

3. TAXES, LEVIES, AND OTHER STATUTORY OBLIGATIONS:

a. CCL (Climate Change Levy):

  • UK government-imposed tax to reduce gas emissions and promote energy efficiency.
  • Discounts under Climate Change Agreements (CCA) for electricity (90%) and gas (65%).
  • Published by HMRC – reviewed every April.

b. VAT (Value-Added Tax):

  • Levied on the sale of goods or services by UK businesses.
  • Collected on behalf of HM Revenue and Customs.

4. Account Management Fee:

  • Charge for general account management (admin/billing) by the supplier.
  • Agreed at the start of the contract and fixed for its duration.

5. Consultancy Fee:

  • P/kWh fee for utility account management, agreed between customer and broker/consultancy.
  • Usually fixed for the contract duration.

6. Tolerance Breach:

  • Fee for excess or shortfall quantities of energy outside the agreed tolerance range.
  • Monthly application if annual tolerance is breached.
  • Usually invoiced separately.

7. RECONCILIATION ADJUSTMENTS:

  • BSUoS/FiT/RO/Triad/Capacity Market adjustments to balance estimated and final charges.

8. Additional Charges:

  • Some suppliers may include extra charges, e.g., commercial discounts due to a large business portfolio.

Flexible Gas Supply Charges:

1. Meter Asset Charge:

  • Charge for provision, installation, and maintenance of industrial measurement meters.
  • Charges vary based on the meter’s gas-passing capacity.
  • May include fees for other on-site assets like correctors, data-loggers, and AMRs.
  • Revised annually every April, based on Meter Asset Manager charges.

2. Ratchet Charge:

  • Penalty for exceeding the site’s Daily Metered Standard Offtake Quantity (SOQ) between October and May.
  • Collected by the supplier on behalf of the network operator.
  • Usually invoiced separately.

3. Transportation Charge:

  • Covers the cost of transporting gas from entry points to the end user.
  • Invoices per kWh, including costs for network maintenance, safety, security, and new gas connections.

4. Reading Charge:

  • Set charges for the cost of meter readings.

5. Unidentified Gas Charge:

  • Covers the cost of gas taken off the system not directly attributed to a shipper.
  • Reasons include theft and unregistered meters.
  • True rate calculated as annual unidentified gas volume by Local Distribution Zone multiplied by average monthly System Average Price (SAP).
  • Suppliers may use forward SAP prices within AUG (Allocation of Unidentified Gas) statements for pricing purposes.
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