Ever wondered where every £1 of your energy bill goes? 💭 Here’s our pound pie chart that shows how it’s sliced. *Figures are approximate due to rounding 🔶 Energy costs – 39.3p: This is the wholesale cost of the gas and electricity you use. 🔶 Infrastructure – 22.6p: Pays for building and maintaining pipes, wires, and networks that deliver energy to your home. 🔶 Policy costs – 13.4p: Supports government schemes like renewable energy and help for vulnerable customers. 🔶 Operating costs – 11p: Covers day-to-day running costs for energy suppliers and the cost of the smart meter rollout. 🔶 VAT – 4.8p: The tax added to your bill. 🔶 Debt – 3p: Helps suppliers manage unpaid bills. 🔶 Industry charges – 2p: Costs relating to the operation of industry bodies that are generally passed through to suppliers. 🔶 Other costs – 1.6p: Headroom allows suppliers to manage uncertainty in their costs. Levelisation makes sure prepayment and Direct Debit customers pay the same standing charge. 🔶 Earnings before interest and tax – 2.6p: Profit made by suppliers before taxes and interest.
Why does Ofgem keep posting DOMESTIC information on a business forum? Do they genuinely not know the difference?
Only 2.6p in every £1 goes to supplier EBIT and that tiny slice has to cover huge volatility, unpredictable wholesale swings, and a £4.4 billion debt pile that keeps growing. If we want a stable, investible retail market that can support customers, innovate, and absorb risk, we need to stop pretending this margin is excessive. The real issue is the imbalance of costs and the scale of bad debt, not the sliver of profit.
Ofgem isn’t this bit a bit/lot misleading? “🔶 Earnings before interest and tax – 2.6p: Profit made by suppliers before taxes and interest.” That’s just the retailers’ earnings [EBIT] not all the other businesses that are embedded in their sectors. In fact VAT (if it looks like our [Australia’s] GST) at 4.8% suggests that there’s a bit distrubition of our expenditure as corporation profits! Lynne Gallagher
2p of every pound goes to ofgem to release meaningless LinkedIn posts 🙌
"Policy" ... you mean Net Zero levies? Could at least be honest.
A nice graphic, but what I would have liked to have seen is the split between Standing Charges and Unit charges - ie breaking it down the same way as our bills are broken down. Lumping it all together allows for fudge factors, but principally my reasoning is that for customers to make meaningful decisions about their Energy Consumption and their future actions to help achieve Net Zero, they need to have accurate data on which to base those decisions.
Debt? What debt? Other consumers?
Its really interesting seeing the price breakdown, and the amount of external costs.
Useful breakdown. But the real question is what we do with it. Energy costs only make up 39p in the pound. The rest reflects the cost of running and upgrading a system that is going through the biggest transition in decades. That is why bills stay high even when wholesale prices fall. It is also why unit price alone cannot be the thing we keep trying to fix. If we want lasting affordability we have to redesign the retail market so that customers can actually benefit from a cleaner system. That means products that reflect how people live, reward flexibility and support those who are vulnerable or fuel poor with dignity, not blunt tools. Right now the only differentiator is price. That helps nobody. We need a market that empowers customers, enables innovation and makes the best use of low carbon power rather than hiding system costs in the standing charge. This chart is a reminder that affordability is a system design issue as much as it is a cost issue. Reform is the route to lower bills over the long term.