Third party and industry charges

Energy bills are made up of a combination of the commodity cost (the fuel you consume) and non-commodity costs. Included in the non-commodity costs are government originated charges and third party charges. Some of these charges are levied on suppliers who pass them onto the customer.

Your contract may have these charges included in your overall agreed price, if so they won’t be shown on your invoice. Or you may have these items separated out, in which case they will be shown as separate line items on your invoice.

Examples of government originated charges are the Feed in Tariff (FiT) Charge, Electricity Market Reform (EMR) charges such as Contracts for Difference (CfD) and Capacity Market (CM). Examples of third party charges include Distribution Use of System (DUoS), Balancing Services Use of System (BSUoS) and Transmission Network Use of System (TNUoS).

Invoice charges
Explanation of charge terminology and function open/close

Charge Who's it paid to? What is it?
BSuoS - Balancing Services Use of System National Grid Charge for keeping the network in balance
CCL - Climate Change Levy HM Revenue and Customs A tax on energy aimed at increasing energy efficiency and reducing carbon emissions
CfD - Contracts for Difference HM Revenue and Customs Support scheme for low carbon generators which provides long term price certainty to increase investment
DUoS - Distribution Use of System Distribution network operator Charge for distribution electricity across the distribuion network to the customer supply point
FiT - Feed in Tariff Ofgem Levied on suppliers to fund the Feed in Tariff scheme designed to incentivise new renewable generation
Flexible Purchasing Supplier Charges / credits for flexible purchasing - not applicable for fixed contracts
RO - Renewable Obligation HM Revenue and Customs Levied on suppliers to fund the Renewable Obligation scheme
Settlement & Agency Charges Data Collector, Data Aggregator & Meter Operator Charges for Data Collectors (retrieving meter reads or consumption data), Data Aggregators (for industry settlements purposes), and Meter Operators (maintaining the meter)
TNUoS - Transmission Use of Sytem National Grid Charge for using and maintaining the transmission network

Capacity Mechanism
An Electricity Market Reform (EMR) mechanism to help the UK meet its carbon reduction targets and ensure security of electricity supply open/close

What is the Capacity Mechanism (CM)

The CM is designed to make sure we have sufficient power available to meet our future needs. It operates as an annual auction, which started in December 2014, to procure the majority of the UK’s required energy capacity four years in advance. There is a top-up auction one year ahead of delivery to enable demand-side response to participate. The cost of running the CM is passed through to consumers.

How CM is charged

The Operational Costs Levy reflects the running cost of the scheme set by the Electricity Settlement Company (ESC). This is a fixed unit rate per kilowatt hour for each 12-month period. The full CM levy costs will not be introduced until 1st November 2016 when demand side response participation begins. We will write to customers with more information closer to the start date.

For HH sites CM can either be charged as a pass-through cost which will appear as a separate line items on invoices, or consolidated in the overall supply rate customers pay. For NHH sites CM can only be consolidated in the overall supply rate.

For HH pass-through two CM charges will appear on your invoice:

  • The Operational costs levy which reflects the running cost of the scheme set by the Electricity Settlement Company (ESC). This is a fixed unit rate per kilowatt hour for each 12-month period.
  • The Obligation levy which reflects the costs of the capacity auctions (demand side response and generation) will be charged during the winter peak period (November to February between 16:00 and 19:00 on working days). This will initially be charged using a forecast rate and reconciled once the winter peak period has ended and an actual rate can be calculated.

CM rates

     
 

1st Apr 2017 to 31st Mar 2018

CM operational rate

This charge is fixed annually

0.002 p/kWh
(£0.02/MWh)

 

Forecast rate

Actual rate

 

1st Nov 2016
to 28th Feb 2017

1st Nov 2016
to 28th Feb 2017

CM Obligation Levy

0.191p/kWh (£1.91/MWh)

£ to be confirmed after
28 th February 2017

Find out more about the Capacity Mechanism

Contracts for Difference (CfD)
An Electricity Market Reform (EMR) mechanism to help the UK meet its carbon reduction targets and ensure security of electricity supply open/close

What is 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.

How CfD is charged

For HH sites CfD can either be charged as a pass-through cost, quarterly fixed or consolidated in the overall supply rate customers pay. For NHH sites CfD can either be quarterly fixed or consolidated in the overall supply rate.

Pass-through charges will appear on your invoice under a heading of ‘contracts for difference’. The single forecast or actual charge is made up of two elements:

  • Operational Costs Levy reflects the running costs of the scheme set by the Local Carbon Contracts Company (LCCC). This is a fixed unit rate per kilowatt hour for each 12-month period.
  • Supplier Obligation Costs reflect the amount of low-carbon electricity funded by the scheme, and is based on the subsidy paid to each CfD generator based on volume of energy generated and wholesale electricity costs. As this will vary throughout the year, a forecast rate will be issued at the start of each quarter and an actual rate then confirmed after each quarter. Once the actual rate is known a reconciliation will be performed to amend any charges billed using a forecast rate.

Quarterly fixed charges - This is a quarterly fixed fee that we will calculate and revise as necessary each quarter. This avoids the need for multiple reconciliations and complex calculations. This option is available for both non-half-hourly and half-hourly metered supplies.

CfD rates

Pass through charges

 

Quarter

 

Actual charge

Forecast charges

 

1st Oct 2016
to 31st Dec 2016

1st Oct 2016
to 31st Dec 2016

1st Jan 2017
to 31st March 2017

1st Apr 2017
to 30th June 2017

CfD Operational Cost Rate

This charge is fixed annually

0.005 p/kWh
(£0.05/MWh)

0.005 p/kWh
(£0.05/MWh)

0.005 p/kWh
(£0.05/MWh)

0.005 p/kWh
(£0.05/MWh)

CfD Supplier Obligation Rate

0.013 p/kWh
(£0.13/MWh)*

0.102 p/kWh
(£1.02/MWh)

0.096 p/kWh
(£0.96/MWh)

0.151 p/kWh
(£1.51/MWh)

Total Rate

As shown on customer invoices

0.018 p/kWh
(£0.18/MWh)*

0.107 p/kWh
(£1.07/MWh)

0.101 p/kWh
(£1.01/MWh)

0.156 p/kWh
(£1.56/MWh)

*The Actual Rate, which is rounded to 3 decimal places, is not shown on invoices as it can be different for each day. Please refer to the attached pdf for the individual daily rates

Daily Actual CfD rates [PDF, 148KB]

Quarterly fixed charges

   

Quarter

1st Oct 2016
to 31th Dec 2016

1st Jan 2017
to 31st March 2017

1st Apr 2017
to 30th June 2017

CfD Quarterly Fixed Rate

0.108 p/kWh
(£1.08/MWh)

0.104 p/kWh
(£1.04/MWh)

0.156 p/kWh
(£1.56/MWh)

Find out more about the Contracts for Difference

Renewables Obligation (RO)
A government scheme to support large-scale renewable generation open/close

What is the Renewables Obligation?

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.

How RO is charged

RO can either be charged as a pass-through cost which will appear as a separate line item on invoices, or consolidated in the overall supply rate customers pay. Both these options are available to NHH and HH customers.

Pass-through costs are known up front which means customers are charged using an actual rate and there is no need for a future reconciliation.

RO pass-through rates

 

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
(£12.86/MWh)

1.558 p/kWh
(£15.58/MWh)

1.882 p/kWh
(£18.82/MWh)

Feed in Tariff (FiT)
A government scheme to support small-scale renewable generation open/close

What is the Feed in Tariff?

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.

How FiT is charged

FiT can either be charged as a pass-through cost which will appear as a separate line item on invoices, or consolidated in the overall supply rate customers pay. Both these options are available to NHH and HH customers.

Pass-through costs are not known up front so are initially estimated for each FiT year (1st April to 31st March). There will be a reconciliation performed during the October to December quarter after a FiT year has ended and the actual costs are known.

FiT pass-through rates

 

Feed in Tariff cost

Forecast charges

Actual charges

1st Apr 2014
to 31st Mar 2015

0.293 p/kWh (£2.93/MWh)

0.339 p/kWh (£3.39/MWh)

1st Apr 2015
to 31st Mar 2016

0.405 p/kWh (£4.05/MWh)

0.445 p/kWh (£4.45/MWh)

1st Apr 2016
to 31st Mar 2017

0.494 p/kWh (£4.94/MWh)

£ to be advised before
1 st Jan 2018

1st Apr 2017
to 31st Mar 2018

0.547 p/kWh (£5.47/MWh)

£ to be advised before
1 st Jan 2019

Climate Change Levy (CCL)
Climate Change Levy (CCL) is a tax on the use of certain fuel and power, including gas and electricity, by non-domestic users in the UK. open/close

What is the Climate Change Levy?

It was introduced to incentivise businesses to reduce their energy consumption and to become more energy efficient, thereby reducing carbon emissions.

As your energy supplier, we collect this levy via your invoice on behalf of HM Revenue & Customs (HMRC).

How CCL is charged

CCL is charged on the kWh of gas and electricity shown on your invoice. There are Separate CCL rates which apply for gas and electricity.

The rates of CCL are usually increased annually at start of the tax period from the 1st April.

CCL is not chargeable on:

  • supplies for domestic use;
  • supplies to charities in relation to their non-business activities; and
  • supplies to business customers who use very small quantities of energy.

Some supplies qualify for a reduced rate of CCL. Where that is the case, the customer must submit a PP11 Supplier Certificate to us in order for the relief to be applied to the account.

Further information on CCL, including the details of the exclusions and the reliefs, is available, on the HMRC website.

Climate Change Levy rates

 

Year

 

1st Apr 2016
to 31st Mar 2017

1st Apr 2017
to 31st Mar 2018

1st Apr 2018
to 31st Mar 2019

1st Apr 2019
to 31st Mar 2020

Electricity Climate Change Levy Rates

0.559 p/kWh
(£5.59/MWh)

0.568 p/kWh
(£5.68/MWh)

0.583 p/kWh
(£5.83/MWh)

0.847 p/kWh
(£8.47/MWh)

Gas Climate Change Levy Rates

0.195 p/kWh
(£1.95/MWh)

0.198 p/kWh
(£1.98/MWh)

0.203 p/kWh
(£2.03/MWh)

0.339 p/kWh
(£3.39/MWh)