The price you pay for your gas and electricity is made up of six elements: wholesale costs, distribution costs, government schemes, operational costs, VAT and our profit. We’ve broken this down into percentages, as you can see in the chart below. We base these percentages on our Consolidated Segmental Statement, an annual breakdown of financial results. You can find out more about this on our corporate website.
The wholesale price of electricity and gas goes up and down throughout the year. We buy most of our energy in advance, to keep your gas and electricity prices low and price changes to a minimum. And we invest in places to store the gas we buy to keep costs down.
We pay other network operators to get gas and electricity to your home. These companies build and maintain the equipment needed to distribute energy across the UK. Ofgem's website explains how they control how much money network distributors can make from this.
As a large energy company, we’re obliged to contribute to various government schemes including:
We think the aims of these social and environmental programmes are great, but they do come with a cost.
Our operating costs include things like billing, customer service and IT systems. We try to keep these costs low when providing energy tariffs, but we also want to give you great customer service.
The profit we make lets us do a lot of things. We put a lot of it back into the UK's energy system to make sure it's fit for the future. It also means we can pay our fair share of tax, employ thousands of people in the UK and give a fair return to our shareholders.
All gas and electricity has Value Added Tax (VAT) added to it by the government. This is set at 5% and is the same across all suppliers.