Electricity billing in the UK

Transmission charges, known as "Transmission Network Use of System" (TNUoS), are paid to National Grid to cover the expense of running the grid.[1] The charge is calculated annually using the TRIAD method for large levels of demand, or based on usage between 4pm and 7pm for smaller demand levels.

Residual Cashflow Reallocation Cashflow (RCRC), also known as the 'beer fund', is the net remainder of Balancing & Settlement Code (BSC) Trading Charges for a given half-hour, which is payable to (in the case of a surplus) or by (in the case of a deficit) Trading Parties based on their market share of energy volume.[2] These Trading Charges consist of:

• Information Imbalance Charges – A charge per MWh on the difference between a BM Unit's Metered Volume and its Expected Metered Volume (based on Final Physical Notification plus Balancing Services Volume). Due to a zero price, this charge is always zero
• System Operator BM Cashflow – A cashflow payable to or by the System Operator depending on whether BM Unit Cashflow plus Non-Delivery Charges is positive or negative, and is intended to keep BSCCo cash neutral
• Non-Delivery Charges – A charge levied on the Lead Parties of BM Units that fail to satisfy a Bid-Offer Acceptance on the Balancing Mechanism
• BM Unit Cashflow – A cashflow payable to or by Lead Parties of BM Units with Bid-Offer Acceptances
• Imbalance Charges – A cashflow payable to or by Trading Parties with an Imbalance Volume

As Information Imbalance Charges are always zero, and System Operator BM Cashflow nets with Non-Delivery Charges and BM Unit Cashflow to zero, RCRC is effectively the net of Imbalance Cashflows.

The distribution charges, known as the "distribution use of system" (DUoS) charges, are paid to suppliers and passed on to the distribution network operator (DNO) on whose network the meter point is located.[3] The charges cover:

Supply availability, otherwise known as "supply capacity" or "kVA", if represented by its measured units, is the maximum kVA power allowed for a particular supply in a particular network and is set before the supply is energised. It is a figure agreed between the consumer and the supplier (set to a level required by the consumer in almost all cases except where power distribution may be physically limited to the supply) at the start of the contract. This supply availability is charged for every month, in effect as a standing charge, despite the fact that the maximum demand recorded in the month may be lower. If the kVA supply availability figure is exceeded (breached, in effect) by the value of the measured monthly maximum demand, also in kVA for this purpose, the higher figure of kVA from the maximum demand may be charged instead of the supply capacity. The new elevated kVA charge figure (or the supplier's nearest higher capacity band figure, if capacity is only allowed in banded levels 50 kVA apart for instance) may stay as the chargeable figure for twelve months depending on the electricity distribution area. This can cause temporary unnecessary high billing, as if a penalty, if the breach was avoidable. Alternatively, the capacity charge can just return to the original availability figure in the subsequent month's bill. Determining the correct capacity figure to allow for the maximum demand required for the supply can be a fine judgement if the capacity charge is to be kept to a minimum, and vigilance of maximum demand and efforts to keep the power demand lower than the agreed capacity can be required to avoid triggering a higher capacity charge during the contract.

• Unit rates – these rates are split into 3 time periods; Red, Amber and Green. These charges vary per distribution company. The chart below shows the applicable time bands for each company.

This also varies with each distribution area, and is charged if the power factor for a supply is deemed too low.

The fixed charge is in units of pence / MPAN / day.[4]

New DUoS charges will come into effect on 1 April 2018 under a proposal known as DCP228. Green and amber rates will rise and red rates will fall.[5]

The Climate Change Levy is a p/kWh tax on certain electricity use. Exempt supplies include domestic supplies and supplies using less than the de minimis threshold of 1,000 kWh / month.[6]

Suppliers meet the Renewables Obligation by submitting a certain number of Renewable Obligation Certificates (ROCs) each year to Ofgem, which demonstrates that the certified electricity has come from a renewable source. If a supplier is unable to produce the required number of ROCs, they must pay an equivalent cash amount, the 'cash out price'.[7]

Energy charges are the cost per kWh (kilowatt hour). They are usually given as pence per kWh (p/kWh), an amount often referred to as the unit price or unit rate.[8]

The data collection charge is a fee paid to the data collector for determining the energy consumption of the supply.

The meter operation charge is a fee paid to the meter operator for installing and maintaining the meter.

VAT is payable at the standard rate unless the supply meets certain conditions (e.g. domestic supplies, or supplies that use less than 1,000 kWh per month) in which case they are charged at the reduced rate of 5%.[9]