Understanding the Variability in Electricity Unit Rates and Daily Standing Charges
One of the most common queries we have at WME is around the varying unit rates and daily standing charges associated with electricity prices.
One of the most common queries we have at WME is around the varying unit rates and daily standing charges associated with electricity prices.
“I have 10 schools in my Multi-Academy Trust, why do they all have different electricity unit rates and daily standing charges?”
While the electricity itself is a fundamental component of the final price that you pay (Circa 35%), a significant portion of your electricity bill (Circa 65%) is attributed to “non-commodity”, or “non-energy” costs.
These non-commodity costs include expenses related to infrastructure, transmission, distribution of electricity, plus various regulatory charges. These costs are multifaceted and vary at meter level, leading to the observed differences in unit rates and standing charges.
Before we delve into the key factors that contribute to the vast variability in electricity unit rates and daily standing charges, it is important to understand that the actual cost for electricity, is likely the same in each of our prices.
One reason for the vast variability in non-commodity costs is that a number of components making up the non-commodity costs (as listed below) are based on your specific usage patterns at meter level. For example, daily / annual consumption patterns are considered and directly impact the charges attracted.
Infrastructure and Maintenance:
Transmission and Distribution
Network Losses
Regulatory Charges
Market Dynamics
Summary
Understanding the variability in electricity unit rates and daily standing charges requires recognising the intricate web of non-commodity costs. From infrastructure investments to regulatory charges, each component plays a crucial role in determining the overall cost of electricity at the meter level.
As consumers, being aware of these factors can empower us to make informed decisions about our energy consumption and explore ways to contribute to a more efficient and sustainable energy future.