How do we calculate network costs?

We calculate network costs using the Ofgem Supply Market Indicator (SMI). This is our 12-month forward look at the pricing trends and costs which make up an average energy bill. The network costs represented in the SMI do not take account of the costs that generators are charged for using the gas and electricity networks.This portion forms a small part of electricity wholesale costs.

We estimate the domestic charges received by suppliers from network companies and assume that these charges are directly passed on to customers through bills. However, in practice, suppliers may choose to allocate these costs across their customer base in a different way. You can find out more on our SMI page.

The balancing charge (BSUoS) recovers the cost of the day to day operation of the network by the System Operator. These costs depend on the 'balancing' actions that the operator may take to ensure our supply of energy matches demand.

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