The bill for electricity is one of the biggest puzzles for the company's owner, or even the chief or chief of finance. Position by position explains what you pay for and what you can optimize. This is worth understanding, for even the amounts that seem inviolable can be reduced with wise purchasing policy.
As a general rule, the electricity bill consists of two parts: charges for spent energy and charges for its delivery (distribution fee). However, each of these parts has a lot of fees to get to know.
Part one: electricity charge
The part relating to the purchase of electricity consists of the cost of purchasing the energy itself, the cost of releasing certificates, excise duties, exchange costs, risk valuation, profile costs, seller margin. These parameters are shown only in the offer, but we no longer see them on the invoice. Sometimes bidders do not show them even in offers - then it is completely unknown on what basis the price for electricity is calculated. In the account we see only one item called "active energy", which includes all these components.
Let's look at what individual components of electricity prices mean.
- Cost of electricity alone
It is valued in the offer in different models, e.g. constant price, indexed price, SPOT - the amount of this cost can be negotiated or e.g. change the purchasing model.
- Risk factors
Risk factors are one of the elements of the electricity bill. These are components that take into account the volatility of energy prices on the market. The electricity price may be subject to fluctuations due to various factors such as changes in the prices of energy raw materials, product liquidity, stability of supply or weather conditions affecting the production of energy from renewable sources. Risk factors are intended to protect energy retailers from sudden price changes on the market and enable them to maintain financial stability in the event of these deviations.
NOTE - this part can be negotiated with the seller.
- Kp - electricity consumption profile factor
This is a factor determining the deviation of the client profile from the so-called base profile (i.e. when the power ordered is the same at each hour). Depending on whether the customer consumes energy during peak periods (so-called peak), this value will be above 1.0, and if in offpeak hours the coefficient will be below 1.0.
NOTE - this part can be negotiated with the seller. It is worth checking how the profile was calculated in the offer.
- M factor
A component that takes account of the seller's margin, other costs, in particular excise duty, the cost of balancing trade, the cost of carrying out the obligations to acquire and present the rights of property of energy origin for redemption.
NOTE - this part can be negotiated with the seller.
- Trade fee/charge for an additional energy product
Fee covering contract administration costs (invoices, etc.) and other services, e.g. insurance, access to professional repair services, fleet discounts, etc.
- Certificates and guarantees of origin
Guarantees of origin are elements of an energy-related current account and constitute a support system for these sources. There are currently three types of certificates: green, blue and white. When selling energy, individual certifications must be waived - this is done by the energy seller. The percentage of the obligation for each certificate is derived from legal provisions.
NOTE - this part can be negotiated with the seller.
- Excise
Excise is an additional tax that is levied at the price of electricity.
NOTE - this part cannot be negotiated with the seller, it follows from the law.
Part Two: Charge for distribution of electricity
The electricity distribution fee is created by the so-called "OSD" - natural monopolists. Moreover, this fee accepts the Energy Regulatory Office - it is therefore officially regulated and cannot be amended. We can influence its amount only by the volume of power order and electricity consumption. Some elements can be optimised:
- Distribution fees
Distribution/network fee (fixed and variable) is the charge for the supply of electricity through the distribution network to the client company. They cover the distribution network operator the costs associated with the operation, modernisation and maintenance of power lines and transformer stations. The amount of the charge depends on the volume collected by the energy company.
- Capacity fee
The capacity charge shall be added to the end-user accounts (company) and shall be financed by the maintenance costs of the power plant and power reduction capacity that may be activated in the event of a power shortage risk in the electricity system. Depends on the volume of energy consumed.
It can't be negotiated, but it can be reduced.
- Subsidies and support for the energy sector
In some cases, the government may grant subsidies or financial support to the energy sector, particularly in the context of renewable energy or initiatives to reduce greenhouse gas emissions. These costs are passed on to consumers through electricity bills. Such an example is the RES charge, transitional or cogeneration charge.
The electricity bill consists of many elements that together shape the final price of electricity. Understanding them will help the company in the selection stage of the offer, also helps to consciously look for beneficial offers of electricity sellers and manage our energy costs in the company.
We will help you find the best offers and negotiate additional benefits with the sellers! You want to know more - contact us