Why Nearly Two-Thirds of Your Business Electricity Bill Isn't the Energy Itself

One of the more common questions businesses raise when reviewing their electricity costs is why a bill has increased when nothing about the way they use energy has changed. Consumption is steady, the contract has not been renewed, and yet the invoice is higher.

The answer usually lies in the part of the bill that receives the least attention. Alongside the price per kWh sits a second set of charges that fund the electricity networks, the balancing of the system and government energy policy. Known collectively as non-commodity costs, they account for roughly 60% to 65% of a business electricity bill, and the fixed element in particular has risen sharply.

This guide explains what non-commodity costs are, why Transmission Network Use of System (TNUoS) charges rose in April 2026, which other charges are moving, and what businesses can realistically influence.

What Are Non-Commodity Costs?

Non-commodity costs are the charges on a business electricity bill that fund the electricity networks, system balancing and government energy policy, rather than the electricity itself. They typically account for 60% to 65% of a UK business electricity bill and are set by regulators, the system operator and the network operators rather than by your supplier.

A business electricity bill divides into two parts. The first is the commodity cost: the wholesale price of the electricity itself, plus your supplier’s margin. This is the part of the bill that moves with the energy market, and the figure most businesses focus on when comparing quotes.

The second is everything required to deliver that electricity and operate the system around it. The transmission and distribution networks, the balancing of supply and demand, metering and the levies that fund low-carbon generation all sit here.

The network and policy charges are set by Ofgem, the National Energy System Operator (NESO), the regional distribution network operators and government. Your supplier sets none of them and cannot change what your site is liable for.

Why Some Charges Don’t Move With Your Usage

Non-commodity charges reach your bill in two main ways, and the difference is what allows a bill to rise when consumption hasn’t.

Some are charged per site, per day, regardless of how much electricity you use. The transmission residual charge and the distribution fixed charge work this way, and they usually show up in your standing charge. Others are charged per unit, so they rise and fall with usage.

The sharpest increase in April 2026 landed in the first group, on the transmission residual charge.

TNUoS and DUoS: The Network Charges Explained

Transmission Network Use of System (TNUoS) charges recover the cost of building, operating and maintaining Great Britain’s high-voltage transmission network: the pylons, cables and substations that carry power from where it is generated to where it is used. NESO sets the tariffs annually.

For most consumers, more than 90% of the TNUoS cost comes from the residual charge. This is a fixed daily amount, banded by a site’s connection voltage together with its agreed capacity for half-hourly sites, or its consumption for non-half-hourly sites. NESO published the final 2026/27 tariffs on 30 January 2026, confirming a volume-weighted average increase of 64%, with individual bands rising by between 28% and 116%. The bands themselves were also revised from 1 April 2026, so some sites changed band as well as facing a new tariff.

The driver is investment. 1 April 2026 marked the start of RIIO-ET3, Ofgem’s five-year price control for electricity transmission, under which network operators are funded to deliver a substantial programme of network reinforcement. Connecting renewable generation in remote locations to the population centres that use the power requires significant new infrastructure. Total TNUoS revenues for 2026/27 were confirmed at £7.61 billion.

Distribution Use of System (DUoS) charges fund the local networks carrying electricity from the transmission system to individual premises. Set by the regional network operators rather than NESO, they combine a fixed daily charge with unit rates weighted towards weekday peaks. These also changed on 1 April 2026, and the published 2027/28 tariffs show further increases for most regions.

Not Every Charge Is Rising

Balancing Services Use of System (BSUoS) charges, which cover the cost of matching supply and demand in real time, fall across the current charging year: £13.74/MWh for April to September 2026, then £12.49/MWh through to March 2027.

The Renewables Obligation and Feed-in Tariff levies switched from RPI to the generally lower CPI measure of inflation on 1 April 2026, slowing their annual growth.

The nuclear Regulated Asset Base levy has moved the other way. Introduced in November 2025 to help fund Sizewell C, it is reset quarterly and now sits around 30% above its opening rate, at £4.488/MWh for July to September 2026. 

Relief for Energy Intensive Businesses

One group of businesses saw the opposite happen in April 2026.

Manufacturers in eligible sectors that pass an electricity intensity test can apply to the Department for Business and Trade for an Energy Intensive Industries (EII) certificate. This qualifies them for the British Industry Supercharger: up to 100% relief on the Renewables Obligation, Feed-in Tariff and Contracts for Difference levies, and full exemption from Capacity Market charges. Certified sites are separately exempt from the nuclear RAB levy.

From 1 April 2026, compensation on eligible network charges rose from 60% to 90%, worth up to £420 million a year across the scheme. It covers TNUoS, DUoS and BSUoS. The network charging compensation is claimed back rather than deducted at source, so the charges reach the bill first and are reimbursed afterwards.

Support is also widening. The British Industrial Competitiveness Scheme will extend electricity cost relief to a broader pool of manufacturers from 2027.

What This Means for UK Businesses

For businesses without EII relief, published supplier and consultancy analysis puts the overall effect of the transmission increase on electricity bills at between 5% and 15%, with the upper end applying to half-hourly sites holding large agreed capacities.

The impact is not evenly distributed. As the residual charge is banded, every site in a band pays the same daily amount regardless of how much electricity it uses. A business using less than others in its band therefore carries a higher effective cost per unit. Multi-site businesses feel it hardest, since the charge applies at every meter point.

The wider picture is that the fixed portion of the bill is growing as a share of the total, and is forecast to keep growing through to the end of the decade.

What Businesses Can Influence

Non-commodity charges cannot be avoided or negotiated down, and switching supplier does not remove them. There are, however, several areas where businesses have some control over what they ultimately pay.

Contract structure

Most suppliers pass TNUoS through, so an increase can reach your invoice partway through your contract. A fully inclusive contract works the other way: the supplier absorbs it and prices a premium into your rates for carrying that risk. Even then, some contracts allow regulatory increases to be passed on anyway, so the terms are worth checking. Our energy team can tell you which applies to yours.

Agreed capacity

Half-hourly sites pay a daily charge against an agreed kVA limit, and that same figure decides which transmission residual band the site falls into. Where the limit sits well above what a site actually needs, it can be pushing up both charges. Cutting it too far brings excess capacity penalties, though, and restoring headroom later can mean a new connection application. Our energy monitoring software shows your peak demand, so you can see whether your agreed capacity still fits how the site runs.

Billing accuracy

Errors in third-party charges are common and rarely spotted without a structured check. Bureau services validate invoices and recover costs that would otherwise go unnoticed. At Essex County Laundry, this identified £34,000 in billing errors.

On-site generation

Commercial solar means buying less from the grid, which cuts the charges based on how much you use. It does not touch the fixed daily charges, which you pay either way.

Review Your Business Electricity Costs with Smarter Business

Over the last 15 years, Smarter Business has helped more than 60,000 businesses with their business essentials. Whatever your costs look like, we start with the whole bill rather than the unit rate alone.

Our team can review your contracts and invoices and set out your options, whether you are facing an unexplained increase, approaching a renewal, or just trying to understand what you pay for.

For expert advice or to compare business energy deals, get in touch with the Smarter Business team today.

Frequently Asked Questions

What are non-commodity costs on a business electricity bill?

Non-commodity costs are the charges that fund the electricity networks, system balancing, government energy policy and energy taxation. They include TNUoS, DUoS, BSUoS, the environmental levies, the Capacity Market, the nuclear RAB levy and the Climate Change Levy, and account for roughly 60% to 65% of a typical business electricity bill.

My bill has risen but my usage has not. Why?

The most likely cause is the transmission residual charge, which is levied per site per day and rose by a volume-weighted average of 64% from 1 April 2026. Because it is fixed rather than consumption-based, it increases what a business pays regardless of usage. Depending on your contract, it may appear as an increase in your standing charge or be absorbed into the rates your supplier has quoted you.

Can I avoid these charges by switching supplier?

No. Non-commodity charges are set by regulators, the system operator, the network operators and government, and apply to electricity consumers generally. Certified energy intensive industries are the main exception. Switching cannot remove them. What it can change is whether future increases reach you during your contract term or are priced into your rates from the start.

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