Non-commodity charges on business energy bills explained

When a supplier quotes you a business electricity price, the energy itself (the "commodity") is only one slice. The rest is non-commodity charges: the cost of the wires that deliver power, the cost of keeping the system balanced, and levies that pay for government energy policies. They are not optional and you cannot avoid them by switching supplier, but how they are billed depends on your contract.

How big are they?

One industry guide describes non-commodity costs as typically around 60 to 65% of a business electricity bill. That share varies with your meter type, location and usage, so treat it as a rough guide. For gas the proportion is smaller. What matters is that these charges have been rising: a comparison site noted transmission charges up by more than 60% from April 2026, and a chamber of commerce summary put the rise at up to 102% for some sites.

The main charges, in plain English

Network charges

• TNUoS (Transmission Network Use of System): pays for the high-voltage national grid. It is set annually from April and varies by region, and for larger sites by usage at peak times.
• DUoS (Distribution Use of System): pays for the local network run by your distribution network operator. It often has a standing element, a time-of-day unit rate (red, amber and green bands for half-hourly sites) and a charge linked to your agreed capacity.
• BSUoS (Balancing Services Use of System): pays for keeping supply and demand matched second by second. It is set in fixed six-month blocks.

Some industry commentary expects local network charges to rise again from April 2027. That is a forecast, not a confirmed figure. Ask your supplier or broker what they have assumed.

Policy and environmental levies

• Renewables Obligation and Feed-in Tariff: support payments to renewable generators. For 2026-27 the government set the Renewables Obligation at 0.472 certificates per MWh and Ofgem set the buy-out price at £69.34 per certificate, which works out at 0.472 x £69.34 = about £32.73 per MWh, or roughly 3.3p/kWh. The Feed-in Tariff levy is much smaller.
• Contracts for Difference (CfD): top-up payments for newer low-carbon generation. The levy is reset each quarter and can move a lot, so ask your supplier for the current figure.
• Capacity Market: pays power stations to be available when demand is high.
• Nuclear RAB levy: a Regulated Asset Base charge towards new nuclear. The Low Carbon Contracts Company set the interim rate for April to June 2026 at £4.683 per MWh, about 0.47p/kWh; it is reset quarterly.
• UK ETS: the UK carbon market. Generators must buy permits, and that cost feeds into wholesale power prices rather than appearing as a separate line on most bills.
• Climate Change Levy: a tax of 0.801p/kWh on both electricity and gas from 1 April 2026, rising to 0.827p/kWh from 1 April 2027. It is shown separately, and some users are exempt or discounted.

Not every one of these is a charge on you at the stated rate: the true cost per kWh depends on your supplier's pricing and how costs are shared across customers, so use these as a guide to scale.

Fixed contract versus pass-through

This is where the choice of contract matters most.

Approach	How non-commodity is handled	Main risk
Fixed (non-pass-through)	Supplier builds its estimate of network and levy costs into your unit rate and standing charge.	You may pay a risk premium for the supplier's guess; if costs rise, you are protected until the contract ends.
Pass-through	Wholesale energy is priced in the contract, but network and levy costs are billed as they occur, itemised.	Bills can rise during the term, and some charges are adjusted months after the period they cover.

Our short entries on pass-through and non-pass-through define the terms, and pass-through vs fixed charges in a quote shows what to look for. The Principal Terms of any quote should make clear which you are being offered.

Some levy charges are published after the period they cover, so on pass-through contracts you can receive reconciliation adjustments, sometimes long after the event.

Worked example

A small shop uses 20,000 kWh of electricity a year. Say a pass-through quote shows the following. These are hypothetical figures chosen to show the sum, not real rates:

• Energy: 10.5p/kWh x 20,000 = £2,100.
• Network and levies: 15.5p/kWh x 20,000 = £3,100.
• Total unit cost: £5,200, which is 26p/kWh. Network and levies are 3,100 / 5,200 = about 60%.

If the network element rose by 10% (to 17.05p), the bill rises by 1.55p x 20,000 = £310. On a fixed contract you would not see that until renewal; on a pass-through you would.

Can you reduce non-commodity charges?

• Use less in peak periods. On half-hourly meters, DUoS red-band hours cost most. See half-hourly meters explained.
• Check your agreed capacity. If you pay for more capacity than you use, ask about reducing it; see supply capacity and kVA charges.
• Claim exemptions you qualify for. Charities and domestic-use premises may pay reduced VAT, and some energy-intensive firms have levy relief. Check Climate Change Agreements and energy-intensive industry support.
• Compare how quotes treat them. Do not just look at the headline unit rate.

Why these charges keep changing

Network operators set charges to recover the cost of building and maintaining the grid, and those costs are shared among users, so when the grid needs more investment the charge per customer tends to rise. Policy levies are set by government schemes and are updated on fixed timetables, many of them each April or each quarter. The way these costs are shared between customers is under review, so today's pattern may change. For a view of how these items sit alongside wholesale costs, see how business energy prices are set.

Where to see them on your bill

Fixed contracts typically show a unit rate and standing charge with no breakdown. Pass-through contracts and half-hourly sites usually show line items. Our guide to reading your business energy bill shows where to look.

Next steps

1. Check whether your contract is fixed or pass-through in the Principal Terms.
2. If you are quoted a pass-through price, ask for a recent itemised bill to see real figures.
3. Compare total annual cost, not unit rate alone.
4. Read what are TNUoS and DUoS charges for more on the biggest items.