Estimated network costs per domestic customer (GB average)

Estimated network costs per domestic customer: At-a-glance summary

• The majority of network costs for a domestic customer are for the use of the gas and electricity distribution networks.
• For a household whose consumption does not change, on average across GB we expect network costs in 2018/19 to increase for gas distribution, decrease for electricity distribution, and stay broadly static for transmission costs compared to the previous charging year.
• Actual costs will vary depending on where a customer lives, how much energy they use, and what type of meter they have.

What are network costs?

Suppliers are charged for the costs to build, maintain, improve and operate the energy networks. Most of the networks are owned by monopoly businesses. Therefore through regulation, we limit the revenue that these companies can recover from customer charges to run the networks.

The network charges paid by suppliers vary depending on where their customers live, what type of meter they have, when energy is used and how much energy they use. In total, these charges accounted for approximately a quarter of a dual fuel bill in 2016.

Different charges apply for the high voltage/pressure transmission networks (which take electricity and gas around Great Britain) and the lower voltage/pressure distribution networks, which connect customers to the overall networks.

As well as the charges to suppliers that are considered here, electricity generators and gas producers are also charged for their use of the networks. It is important to note that trends in network costs will therefore also affect supplier costs indirectly through wholesale prices.

Methodology

• Network costs are calculated by combining charging information published by the network companies with assumptions about consumption and losses for domestic customers.
• All costs are calculated for medium annual typical domestic consumption values of 12,000kWh for gas and 3,100kWh of electricity, which is held fixed across the charging years. The actual network costs a supplier incurs to serve a customer will depend on how much energy is used, the timing of its use as well as the charges that apply from one year to the next.
• The costs shown are GB averages, calculated by taking a customer number weighted average of the tariffs that apply in different regions of the country.
• The costs are expressed in nominal money (i.e. the amount of money a customer ‘pays over the counter’), rather than in real terms (i.e. after adjusting for inflation). For electricity, the costs reported are for a standard unrestricted meter.
• Balancing Services Use of System charges are not included on the chart. These charges cover the cost of services used to balance the electricity system and internal system operator operating costs.

The methodology we use to calculate these charges is consistent with our methodology for the Supplier Cost Index, and that used to set the value of the prepayment meter price cap. Further details on the calculations are available in our Supplier Cost Index methodology.

Further information

You can find further information on the different components making up an energy bill at Understand your gas and electricity bill.

To see how the network fits together, visit The energy network: How it works for you.