The three main components of a Business Electricity Bill are wholesale, transmission, and government policy costs. These have an impact on your monthly power bill as well as the overall cost of electricity. This article aims to provide you with an understanding of these costs and how they affect your bill.

Wholesale Costs

Wholesale costs are one of the main components of a business electricity bill and significantly impact how much your business pays for electricity each month. The market sets the cost of electricity at the wholesale level and can fluctuate daily. When demand is high, prices go up, and when demand is low, prices fall.

Businesses that use a lot of electricity can see their bills fluctuate significantly from month to month based on changes in the wholesale cost of electricity. This can make budgeting for electricity costs difficult. For those businesses that consume large amounts of power, it may be worth hedging against increases in the commodity price by signing a fixed-price contract with their electricity supplier.

While the wholesale cost of electricity is out of your control, there are ways to manage your consumption and costs. This can lead to lower bills, even when commodity prices rise. Click here to read how working with an energy consultant can help you understand your patterns of electricity use and find ways to reduce your overall consumption. 

Transmission costs 

Transmission charges make up a major portion of your business electricity bill and significantly impact the overall cost of your power. These charges are incurred for the use of the electric grid and can vary significantly depending on where your business is located. In a few cases, these costs can be mitigated through energy efficiency measures or by locating your business in an area with lower transmission costs. It is important to understand these and how they impact your bottom line so that you can make informed decisions about your electricity usage.

Government policy cost

Government policy costs are the main part of business electricity bills. These charges significantly impact the total cost of your business electricity bill. 

Non-commodity charges are set by government policy and are not based on the cost of electricity production. They are not related to the amount of electricity you use but focus on recovering specific policy costs or promoting certain objectives. These charges can include:

  • Cap and trade programs
  • Renewable energy programs
  • Environmental conservation efforts
  • Efforts to improve energy efficiency
  • The cost of electricity transmission and distribution
  • Provincial or territorial sales taxes

Non-commodity charges are varied and can impact your business electricity bill. It is essential to understand these costs and how they affect the total cost of your electricity. This will certainly help you understand your energy use and consumption. 

The Bottom Line

Businesses can reduce their electricity bills such as becoming more energy-efficient or renegotiating their contracts with suppliers. However, it is important to understand the main components of a business electricity bill to make informed decisions about reducing costs. By understanding the wholesale, transmission, and government policy costs that make up your monthly power bill, you can work towards reducing your overall electricity spending.