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Standing Charges - Ofgem’s RIIO Model Price Control

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RIIO-ED1 Electricity Price Control

Below you will find an example breakdown of the RIIO-ED1 price control model for electricity distribution. This example has been made based on tariff information provided by Npower's 'Feel Good Fix August 2018 v2' for the Dundee area.


Breakdown

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Tariff: Npower's 'Feel Good Fix August 2018 v2'

Example dates: December 1st 2016 - December 31st 2016

Amount of days: 31

Amount of electricity units used: 270 kWh

RIIO-ED1 electricity rate: 16%

Unit rate: 15.3405p per kWh

Standing charge: 18.6375p per day

Usage price: 15.3405p x 270 kWh = £41.41935

Standing charge price: 18.6375p x 31 days = £5.777625

Subtotal = £47.196975 (rounded to two decimal points)

VAT (5%) = £2.36

Total = £49.55 per month

From this point we can work out the amount of money that will be taken from the bill and given to the electricity distribution company by taking 16% from the subtotal.

Electricity distribution cost: £7.5504

Although this isn't a great deal of money, it really does add up when we take into consideration the sheer amount of customers the electricity distribution companies are supplying to. If we take UK Power Networks for example, who provide to around 8.1 million customers, we can see that if theoretically each of the 8.1 million customers consumed equal to this example, UK Power Networks would receive £61,158,240 per month.

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RIIO-GD1 Gas Price Control

Next, here is a breakdown of the pricing structure used to implement Ofgem's RIIO-GD1 price control model for gas distribution. If you have made it to this page without any knowledge of the RIIO Model you can click here to find out more. This example has been made based on tariff information provided by SSE's 'SSE 1 Year Fixed v9' for the North East Region.


Breakdown

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Tariff: 'SSE 1 Year Fixed v9

Example dates: November 1st 2016 - November 30th 2016

Amount of days: 30

Amount of gas units used: 1051 kWh

RIIO-GD1 gas rate: 16%

Unit rate: 3.28p kWh

Standing charge: 23.02p per day

Usage price: 3.28p x 1051 kWh = £34.4728

Standing charge price: 23.02p x 30 days = £6.906

Subtotal = £41.3788 per month (rounded to two decimal points)

VAT (5%) = £2.0685

Total = £43.4473 per month (rounded to two decimal points)

From here we can work out the amount of money that goes to the gas distribution companies by taking 16% from the subtotal.

Gas distribution cost: £6.6192

Although this does not sound like enough to maintain and operate a distribution network, the amount of consumers that this is taken from makes it a rather sizeable figure. If we take Northern Gas Networks as an example, who distribute gas to 2.7 millions homes, we can see that if all of these customers consumed equal to this example, the company would receive £17,871,840 per month.


RIIO-T1 Electricity Price Control

Below you'll see an example break that we have composed for the RIIO-T1 price control model for electricity transmission. If you've got to this page without knowing about Ofgem's RIIO Model you can click here for all the information you'll need. This example has been made based on tariff information provided by British Gas's 'HomeEnergy Capped Feb 2018' for the Yorkshire Area.


Breakdown

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Tariff: HomeEnergy Capped Feb 2018

Example dates: 1st Febuary 2016 - 4th March 2016

Amount of days: 32

Amount of electricity units used: 258 kWh

RIIO-T1 electricity rate: 4%

Unit rate: 12.29p per kWh

Standing charge: 26.01p per day

Usage price: 12.29p x 258 kWh = £31.7082

Standing charge price: 26.01p x 32 days = £8.3232

Subtotal = £40.0314 (rounded to two decimal points)

VAT 5% = £2

Total = £42.03 per month

Now we can work out the amount that will go to the electricity transmission company by taking 4% from the subtotal.

Electricity transmission cost: £1.60

£1.60 isn't even enough buy a bag of Haribo, how is it going to pay for a whole transmission network? Well, if you take the National Grid, for example, which supplies around 23.5 million homes in England, we can work out that if each of these households consumed equal to this example, the National Grid would get £37,628,000 per month... enough to pay for at least three bags of Haribo at today's prices!

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RIIO-T1 Gas Price Control

Here we have composed an example breakdown of the RIIO-T1 price control model for gas transmission. If you have arrived on this page without without knowing about Ofgem's RIIO Model, you can click here to read more. This example has been made based on tariff information provided by EDF Energy's 'Blue: Price Protection' for the Yorkshire region.


Breakdown

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Tariff: EDF Energy's 'Blue: Price Protection'

Example dates: March 1st 2016 - March 31st 2016

Amount of days: 31

Amount of gas units used: 1046 kWh

RIIO-T1 gas rate: 2%

Unit rate: 3.062p per kWh

Standing charge: 26.25p per day

Usage price: 3.062p x 1046 kWh = £32.02852

Standing charge price: 26.25p x 31 days = £8.1375

Subtotal = £40.16602 per month (rounded to two decimal points)

VAT (5%) = £2.008

Total = £42.168 per month (rounded to two decimal points)

At this point we can work out the amount of money that goes to the gas transmission company by taking 2% of the money from the subtotal.

Gas distribution cost: £0.8032

Although this doesn't sound like much, if we take the National Grid, which provides gas to just over 28 million homes across the UK, we can see that if each of the 28 million customers consumed equal to this example, the company would receive £22,489,600 per month.