Sep 12, 2017

What makes up your energy bill?

Ofgem, Office of Gas and Electricity Markets, recently published an infographic regarding bills, prices and profits in the energy market. The figures and statistics demonstrate the energy market share, prices, profits and switching.

 

energy electricity lightbulb

 

Something that everyday users may not be aware of is the breakdown of an average energy bill. The percentages below show the cost breakdown for the dual fuel, gas and electricity bills respectively.

Dual Fuel Bill

37.9% – Wholesale costs
26% – Network costs
8.1% – Environmental/social obligation costs
17.2% – Operating costs
4.8% – VAT
4.8% – Supplier pre-tax margin
1.2% – Other direct costs

Gas Bill

39.4% – Wholesale costs
24.5% – Network costs
1.6% – Environmental/social obligation costs
1.2% – Other direct costs
17.9% – Operating costs
4.8% – VAT
10.6% – Supplier pre-tax margin

Electricity Bill

36.3% – Wholesale costs
27.6% – Network costs
14.8% – Environmental/social obligation costs
1.2% – Other direct costs
16.5% – Operating costs
4.8% – VAT
-1.1% – Supplier pre-tax margin

In other news, a recent uSwitch survey has revealed that almost 1.3 million energy customers were overcharged a total £102m last year because of supplier mistakes. On average, each household was overcharged by £79. The average resolution time was 35 days; however, 7% did not get a refund at the time of publishing (15 August 2017). Interestingly, over a quarter of consumers (27%) have admitted that they do not read their energy bills accurately.

The billing errors reported:

  • 28% were charged an amount that didn’t match their meter readings
  • 26% claimed that their bill didn’t add up correctly
  • 8% had wrong Direct Debit amounts
  • 7% had incorrect fees
  • 5% had tariff or product details wrong
  • 5% had their bills mixed up with someone else’s.

Previously, we explored the three million energy customers switching suppliers, which was announced by Energy UK.

So, how many active suppliers are there in the energy market?

At the time of publishing of the Ofgem infographic (31 August 2017) there were 54 active suppliers competing in the UK energy market. 46 of these provide both gas and electricity, while six supply only gas and two electricity only.

For gas, 18% of the suppliers are SMEs, while 82% are large suppliers. Similarly for electricity, 17% are SMEs and 83% are large suppliers.

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