Revenue cycle and exposure of electricity power vendors

Question

Hello, 
 Does anyone know what is the revenue cycle the electrical energy providers undergo from the moment they buy the energy from the power stations to the moment they sell it to the final customer? 
 I would like to understand what is the liabilities they have when in the electrical power business and to understand if they are forced to pay in advance with respect to the moment they receive the revenue from the sale of the energy 
 I am particularly interested to know what is the time that elapses from the moment they purchase the energy when they bid to the moment they are paid for that energy from the final user. 
 Thanks a lot 
 Gianni

AJJewsbury · Accepted Answer

I suspect it's not quite as simple as that. Some customers (on prepay meters) will pay in advance, but most will pay in arrears - traditionally quarterly in full by cheque (so from anything from a few days to the best part of 4 months since the electricity was consumed), but more likely by direct debit these days with annual costs spread evenly across a year - so depending where in the year the cycle started there might be some outstanding for many months (or possibly even longer if the original estimates weren't spot on, or equally the customer might be in credit for much of the time). On the other side, payment terms with generators will likely be a matter of individual contracts (certainly my FIT payments arrive months after the meter reading was submitted). What supplies pay to generators will only be a part of the costs anyway - there will be payments to National Grid for keeping the grid in balance - which it seems involves a kind of rigged market where they choose the cheapest available, but then pay everyone the same (per kWh) - according to the highest 'bid' price which leads to wildly fluctuating prices (e.g. Drax Electric Insights ), and then there's distribution costs too. Some suppliers have blogs that touch on this kind of thing. 
 - Andy.

Revenue cycle and exposure of electricity power vendors

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