Understanding Your Bill: How to Read Your Energy Company’s Expenses

It can be quite an impressive task to interpret your electricity bill. Energy suppliers need to keep track of their expenses; even your energy supplier is running a business after all. If you’re unaware of how these unseen changes can affect you, then you need to look twice at your energy bill starting right now. Savvy business owners are getting their act straight and learning more about energy transactions to save on their business expenses. Services online like Utility Bidder allow business owners to consider price quotes and energy rates in case they ever need to make the switch.  Before you get swept up by unforeseen energy costs, you might want to learn a little bit more about your monthly statement. Here are a few of the unseen factors that add up to your monthly bill.

Wholesale energy cost

In short, wholesale energy is the general price of the energy service that you avail of from the company. The wholesale price, as its name implies, is its initial price before it gets transferred by a service provider to you. Changes in the market occur now and then and can change depending on supply, demand, and transportation costs. If you’ve availed of a business tariff, you might not be affected by these changes if you opt for a fixed rate energy contract.

Transmission and distribution costs

A significant part of your company’s expenses is in transporting energy. One of the reasons why business owners optimise their location with their energy service provider’s network is because the further away from the power generation plant, the more expensive your transmission costs will be. Knowing where your supplier gets their energy from can give you a reasonable estimate of how much you’re paying for distribution costs.

“Losses” cost

Naturally, we have not yet achieved the level of efficiency that allows us to transport and distribute 100% of energy without losses. The greater the distance that your energy needs to travel over often includes a higher rate of ‘energy loss’ between the main generator to your meter.

Changes in the industry

Companies are always changing and adapting to newer systems. When they are expanding their network to accept a higher volume of subscribers, money needs to be put in for the extension of pipes, wires, and channels to increase the reach of their services. Your bill includes a fraction of the upkeep that the company requires so that they can improve and maintain their facilities.

Supplier margin costs

The supplier margin can often be confused as the ‘company’s tax’ where it varies from service provider to service provider. Though the price differs per company, it does not necessarily mean that it is the highest hidden cost in your bill. It barely resembles any profit for the company as the supplier margin is used to pay for wages and maintenance costs to keep their company functioning for their clients’ benefit.