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What Drives Business Gas Prices?

Guides | Gas

15th November 2018

What Drives Business Gas Prices?

Energy prices can fluctuate on a regular basis.

But what drives these fluctuation in prices, and what types of energy contracts are available to help you get the best deal?

FIRSTLY IT’S GOOD TO KNOW WHAT YOUR BUSINESS GAS BILL IS MADE UP OF:

A gas bill is made up of charges relating to your gas consumption (known as commodity costs), and then additional third party charges (known as non-commodity costs).

WHAT ARE THESE CHARGES?

Wholesale Energy charges:

The majority of your business gas bill is made up of the costs your energy provider pays for your gas from suppliers. The total amount on your bill varies depending on how much gas you use.

System and Network charges:

These charges cover the cost of using the gas distribution and transmission networks, and can vary depending on your business location. They include:

  • Transmission Network Use of System (TNUoS) – The cost for the supplier transporting and distributing your energy along with the maintenance of the National Grid.
  • Distribution Use of System (DUoS) – Charges from the Distribution Network Operators (DNO) for installing and maintaining the local distribution networks.

Tax and Levy charges:

There are mandatory taxes and levies set by the Government which are aimed at encouraging renewable energy development and energy efficiency. For gas, this includes:

  • Climate Change Levy (CCL) – Specifically for businesses, this levy is designed to encourage businesses to improve their energy efficiency and reduce their carbon footprint. This varies with the amount of energy that your business uses.

WHAT CAUSES FLUCTUATIONS IN GAS COSTS?

There are a number of factors that affect the price of business gas.

The main commodity cost of your gas is largely influenced by supply and demand, for example during winter months there is an increase in usage which is therefore reflected in the cost. Stress events, such as cracks in oil pipelines and explosions at gas hubs limit the supply which in turn can impact price. Import/export issues, such as the value of currency and fuel costs, also have an impact on prices.

The remaining non-commodity costs can fluctuate depending on issues such as government priorities, transportation costs and changes to third-party charges.

There are actions that you can take to help mitigate against these fluctuations in price. Most gas suppliers will offer a range of different plans to help budget your gas costs more effectively, so they will be able to advise on the most suitable for your business.

WHAT TYPES OF GAS PLANS ARE AVAILABLE?

At Yü Energy we have different plans available to help you budget your gas costs. Our plans can be tailored to your specific business needs so there are no surprises and you can see exactly what you’re paying for.

Fixed Contracts

Great for small-medium businesses who need a consistent gas plan for budget tracking, peace of mind and no additional hidden charges. Fixed Term contracts allow you to fix the amount per unit (kWh) that you pay for your energy. It does not fix the amount you pay each month, but it does protect you from energy price increases for the duration of your contract.

Prepayment Contracts

Prepayment gas plans give more power and control to a business. They are ideal for budgeting finances and avoiding unexpected bills.

If you want more information about our gas contracts at Yü Energy, give our friendly team a call and we’ll help you find the best option for your business.

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