Pass-Through contracts are becoming more common within the energy supply markets at present. They differ from fully fixed contracts in that only the contract duration and wholesale element of your price is fixed for the entire supply duration. All other non-commodity costs including transmission, distribution & government taxes and levies are passed through to the consumer via their supplier at cost and can change as these are a variable charge. In fully fixed contracts these charges are higher as they have a risk weighting applied to allow for price increases.
For the first time ever in 2017 the non-commodity element of an electricity bill will make up a larger percentage than the wholesale energy cost 55% to 45% so removing the risk premium to these elements applied by suppliers can represent substantial savings on a like for like basis. This can also have an adverse effect as should the non-commodity costs increase then this increase will be passed on in full to you the consumer.
Fixed elements of a Pass-Through contract
- Supply duration
- Wholesale energy cost (Unit Rate per kWh)
Charges passed through to the consumer (this may vary from supplier to supplier)
- AAHEDC – Assistance for areas with High Electricity Distribution Costs
- BSUoS – Balancing Use of System charges
- CM – Capacity Market
- CfD FIT – Contracts for Difference Feed In Tariff
- DUoS – Distribution Use of System Capacity
- DUoS – Distribution Use of System Excess Capacity
- DUoS – Distribution Use of Systems Fixed
- DUoS – Distribution Use of System Reactive Power
- DUoS – Distribution Use of System Unit
- FIT – Feed In Tariff
- Meter Rental
- Metering & Meter Reading
- RO – Renewables Obligation
- TNUoS – Transmission Network Use of System
The Green Energy Advice Bureau build bespoke supply proposals for all our clients and will ensure you fully understand all the cost elements of your supply agreement.