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Non commodity electricity breakdown table

 

A few factors are;

In this current climate, the rule of thumb for calculations on non – commodity charges can equate to around 70% of your total energy costs, therefore when purchasing or managing energy accounts, it is imperative to have a full understanding of how they work and what can impact their prices.

Gas

Natural gas for use in the UK comes from multiple sources such as Norway which is transported through interconnectors travelling under the North Sea, or even further away from USA in the form of liquefied natural gas (LNG) which is delivered via cargo ships.

By transforming the gas into a liquid, it can be compressed to around 600x less volume between transporting it from the source to the UK gas terminals.

The Gas can either be transported directly to CCGTs (Combined Cycle Gas Turbine Plants) to generate electricity or transported through high-pressure pipe systems to compressor stations where the pressure will fall until it is low enough to be used in homes and businesses.

Gas transmission diagram

 

Electricity

To minimise energy loss in the power lines, generated power is transformed through a series of substations. Heat and light is created when an electric current is passed through a conductor which is wasted energy. To minimise the loss of energy, the voltage is increased using a transformer which reduces the electric current. This means that more energy can be transmitted along the power lines with less wastage.

The electricity is transmitted all over the UK at high voltages in the transmission network. Once it gets to the distribution network, electricity needs to be transformed in a step-down transformer to lower and lower voltages, when it can be safe to use in our homes and businesses.

Electricity network diagram

 

Why have non – commodity costs increased?

As previously mentioned, non-commodity costs are used to cover several factors that your energy provider incurs for supplying gas and electricity to your meters.

When looking at the factors previously mentioned, it is understandable as to why these costs are implemented. What makes it difficult to understand is why these prices fluctuate significantly.

Since 2021 onwards, due to several unfortunate events, we have seen some customers pay some of the highest standing charges on record, mainly for electricity meters. As nearly all properties have an electric supply, it was only seen fair that the electricity standing charges was massively increased compared to gas.

Here are a few of many reasons as to why prices have increased.

 

If you’d like to find out more, please get in touch with the energy team at [email protected] or view our framework options for the different ways to procure energy.

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Author

Steven Warren

Energy Key Account Manager
YPO