Network costs cover the charges for maintaining and upgrading the grid infrastructure. They make up 24% of an electricity bill and 19% of a gas bill.
These costs vary by region to reflect the fact that building and maintaining these networks is more expensive in some areas than others.
Network costs are made up of three charges:
- Transmission charges pay for installing and maintaining the pylons and pipelines which carry electricity and gas over long distances, from power plants to local distribution networks.
- Distribution charges cover the costs of local distribution networks which deliver gas and electricity directly to homes.
- Balancing Services charges only apply to electricity bills. They cover the costs of making sure electricity supply meets demand at any given time. Though balancing charges are smaller than the other two charges, they are rising. As more and more of our electricity comes from renewable sources, there is a greater need for balancing services, such as paying power plants to stop generating at times of low demand.
Network costs are mainly collected through the standing charge, because networks need to be maintained for all customers irrespective of how much energy they use.
Network costs component of annual has and electricity bill
Image Description
Column chart breaking down network costs in energy bills. Electricity network costs (£212) include £135 for distribution, £38 for transmission, and £39 for balancing. Gas network costs (£158) include £151 for distribution and £7 for transmission.
