Member Article

Businesses face further energy price rises this winter

Non-commodity charges, which now make up more than half of the average electricity bill and are more acute than ever, are forecast to increase by a further 50% over the next three years.

For the first time, the majority of UK energy spend is now made up of these regulated charges, including network and government, and have increased by between 50-100% since 2013.

They include a whole raft of charges, such as:

• Renewables Obligation • Feed In Tariff • Transmission Use of System • Distribution Use of System • Balancing Use of System

Even more costs have been introduced by the Government, including the Contracts for Difference and Capacity Market charges.

Although wholesale power has dropped by 20% since the last British Gas price rise, this has been outweighed by non-commodity increases, due to changes in Government policy and investment required to modernise the grid system and switch to renewable energy, according to PCMG, a leading cost recovery specialist which has worked with over half of the FTSE 100.

Martin Chitty, Director of Energy Analysis at PCMG, says the rising cost of these regulated parts of the overall electricity bill is a major challenge to energy users.

And he predicts the trend will continue. He added: “We expect all of these non-commodity charges to rise further over the next three years, by an average of 50%, and this is likely to be coupled with a rise in wholesale costs too.”

PCMG is a world-class operating cost consultancy, with 30 years’ experience, based in Lancashire. It is part of the Ayming Group, Europe’s leading business performance consultancy, operating across 16 global markets and in more than 30 countries.

This was posted in Bdaily's Members' News section by Mark Smith .