We all know that with double glazing, conservatories and sufficient insulation in our homes, we can save on our heating bills as cold weather is kept out and heat is kept in, but where does all the money that we are paying out for energy go to?
We know that the ‘big six’ energy firms are under investigation when it comes to their charges, and that price freezes on gas and electricity are also being looked at in the political arena as both David Cameron and Ed Milliband look to stamp some sort of claim to the ‘hearts and minds’ of energy customers.
But what are we paying, and where does it all go?
According to the BBC, the average annual dual-fuel bill – covering gas and electricity – is about £1,264 per household, (with almost four million households currently in debt to their energy supplier on average £128 according to uSwitch) and is one of the highest bills that a householder has to pay, coming behind mortgages and rents, and the dreaded council tax…and around the same sort of financial area as petrol costs and food bills – but all dependent on energy consumption for the individual household. It is, after all, an average.
It may surprise you to know that what we pay in the UK is actually a lot less than most of the other EU countries, although a lot higher than our American cousins.
Around 67% of a gas bill and 58% of an electricity bill, according to Ofgem, goes on buying the gas and electricity on the wholesale market or directly from suppliers, 16% on distribution charges, transmission 2-4%, VAT 5%, and metering and storage about 1-2%. Then there is the cost of government schemes that aim to save energy, reduce emissions and look at the problems of climate change – these add 6% to a gas bill and 11% to an electricity bill.
This leaves the dreaded ‘P’ word: PROFIT. The media have gone ballistic over the ‘big six’ profits – central to the debate. It may surprise you to read that the latest Ofgem figures state that on an average £1,315 bill the profit is ONLY £65 but this is flexible depending on times of the year and the volatility of the energy market. Sometimes it has been as high as £100.
So now you know where it all goes, and why it costs so much, think about saving it with double glazing or a conservatory amongst other energy-saving ideas like loft insulation.
That’s why we are here.