Our energy costs

Energy is a volatile commodity, almost as volatile as share prices. We can’t promise to protect you completely from this volatility, but we do promise to always charge fairly for the energy you use and to be completely transparent about how your statements are calculated.

The charts below give some indication of this volatility over the past year or so.

Customers do not want to be exposed to this daily volatility, so suppliers try to keep their retail prices constant for as long as possible.

Suppliers are able to offer fixed prices by buying some of their future energy requirements in advance at a fixed cost, a technique known as ‘hedging’. This produces a slight lag effect. When wholesale costs are rising, suppliers should not need to increase their retail prices straight away, because they have bought a lot of their energy in advance, before the costs started to rise. Similarly, when wholesale costs are falling, suppliers often don’t reduce their prices straight away. This might seem unfair but it is the result of trying to hold prices constant for as long as possible and in the long run, the retail price of energy does mirror the wholesale cost very closely.

How is your statement calculated?

It might surprise you to know that the cost of the energy represents just half of your statement. So what else are you paying for?

This a typical breakdown of our costs for an average energy consumer.