On this page you will find 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.
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 = £41.37
88 per month (rounded to two decimal points)
VAT (5%) = £2.0685
Total = £43.44
73 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.