Network charges account for almost 50% of a standard electricity bill . But what are they exactly? Effectively, they refer to the ongoing maintenance and implementation of the grid’s infrastructure. That includes all the equipment that pulls power from the electricity grid.
Energy regulator OFGEM is planning to reform how energy network charges are calculated. The original proposal from OFGEM is quite complex, so we’ve decided to break it down for you with 4 steps to help you stay in control of your network charges.
Why are network charges changing?
Simply put, the cost of maintaining the energy network is increasing. The shift from energy generation being connected to the high-voltage transmission system and instead towards low voltage distribution networks means that OFGEM wants to ensure that everyone is paying their fair share in network charges.
How you pay network charges is changing by first targeting residual charges (which make up between 10-15% of a typical energy user’s bill. Due to how the charges are currently calculated for residual charges, it has been possible to avoid paying for the network through shifting your energy use at different times. However, the new reform means that residual charges will be collected based on your final energy usage, so you cannot get out of paying for them by shifting your energy use anymore.
OFGEM is also proposing a fixed charging system which is again based on your final energy usage and categorises businesses into user groups. Each group would pay a single fixed charge, which as a result prevents avoiding paying towards the network charge through shifting energy usage.
4 strategies to use and our advice:
Â 1) Energy consumption reduction – here at British Gas business we can help you measure, manage and reduce your organisation’s overall energy consumption with a full suite of modern and intelligent business solutions
2) Demand side response – Our state-of-the-art DSR solutions can enable you to unlock your full business potential. We can help you access valuable incentives, cut costs, and reduce your carbon emissions
3) Generating without exporting – Our advice: The simplest strategy is to continue to generate on site, use all the power you produce, and not export to the grid
4) Optimised energy strategy – Our Optimisation Desk analytics team has all the tools and knowledge to help you create a robust and optimal energy sales strategy