What are third party costs on a business energy bill?
Energy bills are made up of two basic components – unit cost and non-commodity costs.These are also known by third party costs (TPC).
Non-commodity costs or TPC are split into two categories, Network Charges and Policy Costs.
Network Charges are levied by the network operators for, amongst other things, the maintenance and development of the gas and electricity networks.
Policy Costs are charges introduced by the Government to help support the move towards transition of low carbon generation.
Customers renewing the electricity contracts in 2025 will notice a significant reduction in the standing charge costs.
This mainly due to a reduction in fixed network charges from 2024. Some could be up to a 50% reductions.
What will be seen though, is consumption-based charges are expected to increase notably from 2025.
This will arise as some costs will be taken away from standing charges and fed into the unit rate.
OFGEM are also considering options on tariffs without standing charges or lower charges and have launched a consultation paper. Hopefully this will bring fairness into the industry by shifting the standing charge into a usage charge.
We know energy prices are still on the volatile spectrum. It’s good to see now the energy industry is now, perhaps, looking to being kinder to the customer.
If you would like to read the whole Energy Live News report here
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