ENERGY MANAGEMENT CLARITY IS KEY Energy Management expert and Director of UK Bee,
Tracy Byrne explains the importance of transparency in the energy management sector and the impact it can have on businesses.
When talking about energy there are two key areas of concern, expense and the impact it has on the environment. As a result, it is important for any business to know that as well as controlling costs it is compliant with all relevant legislation and doing the right thing environmentally and socially.
“A 20% REDUCTION IN MOTOR SPEED CAN DELIVER
A 50% SAVING.”
Energy prices are set to rise again, it is predicted that an increase of 13% can be expected over the winter of 2016/17 as suppliers pass on recent wholesale price hikes. Instead of just accepting the increases it is worth reviewing your energy bill outgoings and breaking down each section to understand where the money is going. Contrary to popular belief wholesale energy does not make up the majority of your energy bill. Typically wholesale energy makes up 15%-20% of your bill. Britain competes with other countries for different types of energy, meaning that global availability and demand effects energy prices. These prices are industry set and fluctuate in accordance with availability and the competitive market. In all honesty there is little to be done in reducing wholesale energy costs.
WHAT OTHER COMPONENTS EFFECT
AN ENERGY BILL? Non-Commodity Charges make up over half of your energy bill, this will include but is not limited to the following areas: Non-commodity costs are made up of obligatory
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charges and levies from third parties. They range from the cost of delivering the electricity to your meter, to Government-supported renewable energy schemes:
• The Capacity Market was introduced by the Government as part of the Electricity Market Reform programme in 2013. The goal is to improve the security of electricity supply, reduce prices and increase low carbon electricity. The Government has announced intentions to hold a Capacity Market Auction in January 2017 affecting prices a year earlier than expected. This is definitely one to watch.
• Energy Intensive Industries (EII) is a Government scheme to reduce the impact of renewables policies on the cost of electricity for most EII i.e. heavy manufacturing and metal casting. As much as this helps EII it can also push up costs for non-exempt businesses. Always worth an assessment.
• Transmission Network Use of system-charges, can vary depending on how your system is installed and maintained.
• Distribution Network Operation and distribution charges, which supply each regional distribution network and can differ depending on lower and higher voltages.
This small portion of non-commodity charges offers insight to the extent of different elements businesses get charged in their energy bills and how many government schemes there are out there. This area of your bill is always worth some analysis – whilst you cannot avoid these charges you can ensure they are understood, benchmarked and you choose how to pay for them.
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