Why understanding non-commodity charges is so important

Your organisation likely spends many hundreds of thousands of pounds every year on a range of essential business overheads. And no doubt, the various teams within your business could provide a detailed breakdown of exactly where that money goes.

Take people costs as an example. Your human resources (HR) department could probably account for every penny that is spent on salary, benefits, bonuses, training, tax, national insurance and so on.

But when it comes to energy, do you know how much your business is paying for transmission charges or distribution costs? What about your Assistance for Areas with High Electricity Distribution Costs (AAHEDC) charge? And are you clear on your contribution for the Renewables Obligation (RO), the Feed-in Tariff (FIT), for Contracts for Difference (CfD) or the Capacity Market (CM)?

Indeed, have you even heard of all these charges that are added to your energy invoice, either as pass-through costs or rolled into your standing charge or unit rate (depending on your contract type)?

Getting clear on third party costs

Non-commodity charges are a common area of confusion and misunderstanding. For starters, there are so many of them.

But knowing what you are paying for – and why – can be helpful to enhance your understanding of your energy costs. Even more so now, with wholesale gas and electricity prices so high.

Our latest ‘Energy Made Simple’ reports explain what these non-commodity charges are, how they came about, how you pay for them – and how much they cost – plus what is set to change.

Funding infrastructure and green levies

The first report focuses on all the energy infrastructure-related charges, such as transmission and distribution costs. And the second looks at all the levies added to invoices as a result of government policies to promote the UK’s transition to a decarbonised energy system.

Collectively, non-commodity charges account for around £80 on top of every megawatt-hour (MWh) of electricity your business consumes. They also contribute approximately £10/MWh to the invoiced price of gas – although this is set to increase.

Understanding what these costs are can help you to better understand your overall energy spending, both now and in the future.

Register for our free reports

You can register here to be the first to receive these reports when the first one goes live next week, with the second to follow in early May. (Rest assured, your information is treated in the strictest of confidence, so you will not receive any unsolicited emails.)

And if you have any queries or want to know more, please do get in touch. If you are an existing customer, you can reach out to your Account Manager or Client Lead. Or drop us an email to info@npowerbusinesssolutions.com