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.

Pie chart with breakdown of the price of gas and electricity – mainly wholesale gas and electricity costs and network distribution costs
  1. Wholesale gas and electricity costs – 41%

  2. Electricity and gas distribution network costs – 28%

  3. Government obligations and schemes – 12%

  4. Operational costs – 8%

  5. Our profit – 6%

  6. VAT on energy – 5%

Wholesale gas and electricity costs – 41%

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.

Electricity and gas network distribution costs – 28%

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.

Government obligations and schemes – 12%

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.

Operational costs – 8%

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.

Our profit – 6%

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.

VAT on energy – 5%

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.

More about gas and electricity bills

If you want to find out more about your energy bills, we’ve got lots of gas and electricity help articles to help. We cover topics like explaining your gas and electricity bills, how to pay your energy bills, and estimated bills, plus much more.