Will cheaper electricity charges result in lower energy bills?
The simple answer is No
Business electricity users are all too aware of the recent rises in electricity costs. In fact, electricity bills are made up of a dizzying array of charges, and the actual electricity portion is small, and growing smaller.
Currently, the cost of the electricity element of your electricity bill accounts for only 46.5% of your total bill. The remaining 53.5% is comprised of transmission, metering and distribution charges and environmental taxes.
Environmental charges account for almost 1/3rd of your bill, and here is the key point, these charges are due to increase sharply over the next 3 years. By that time this could mean that only 30% of your bill would comprise ‘actual’ electricity costs. That means even if you were to drastically reduce your tariff your bill would still rise, driven by the increase in associated costs.
The Renewables Obligation charge alone is set to rise 15-20% year on year in 2018 and the CCL (Climate Change Levy) will increase slightly in April 2018 before jumping sharply in 2019. Both these charges are consumption based.