What Makes Up Your Electricity Bill

16|218 WHAT MAKES UP YOUR ELECTRICITY BILL? With the average UK electricity bill standing at £603 a year, chances are you won't have failed to notice the regular payments disappearing from your account. But do you really know what you're paying for? The number that ends up at the bottom of your electricity bill is representative of a whole host of different elements, each crucial to the effective transmission of electricity to your home. According to the latest figure from OFGEM for the UK electricity market, here's how your electricity bill is made up, and what you're actually paying for: VAT Per Cent is Here in the UK, we have an incredibly low rate of taxation on our electricity, in fact one of the lowest in Europe. Despite paying 20 PER CENT VAT on most things in our lives, our electricity is only taxed at the lower rate of 5 PER CENT, as it is deemed to be an 'essential to life' item. 37 THE WHOLESALE COST Per Cent is Electricity companies need to buy the energy from the people who are generating it, and this cost makes up just over a third of our electricity bills. 實 實 贵 實 贵 2 THE NETWORK COSTS Per Cent is Electricity is generated at many different places around the UK, and needs to be moved around the network to ensure the whole country has coverage all the time. This movement is done by the National Grid, and sometimes other operators, who then bill the energy company, who in turn charge us. This is known as the network costs, and makes up around a quarter of our overall bills.