🔌 What Are Network Charges? A Simple Guide for Energy Customers

If you’ve ever looked closely at your electricity or gas bill and wondered why it’s higher than expected—even if you’ve used less energy—network charges might be part of the reason. But what are they, and why are they important?

Let’s break it down in plain terms.

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💡 The Basics: Your Energy Bill Has Two Main Parts

1. Commodity Charges
   This is the cost of the actual gas or electricity you use. It’s what suppliers buy from the wholesale market on your behalf.
2. Non-Commodity Charges (a.k.a. Network Charges)
   These are the extra costs tied to getting energy to your home or business. They include charges for:
   • Maintaining power lines and gas pipes
   • Balancing the energy grid
   • Supporting renewable energy
   • Government levies and taxes

Network charges can make up over half of your total electricity cost and about 16% of your gas cost.

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🛠️ What Do Network Charges Pay For?

Here are some of the main components:

• DUoS (Distribution Use of System):
  Pays for the upkeep and upgrades of local electricity networks—the cables and transformers that bring electricity to your doorstep.
• BSUoS (Balancing Services Use of System):
  Covers the cost of balancing supply and demand on the electricity grid in real time. If the grid has too much or too little power, operators step in—and this costs money.
• Renewables Obligation (RO):
  Helps fund large-scale green energy projects like wind farms. While the scheme itself has ended, ongoing payments support earlier contracts.
• Contracts for Difference (CfD):
  Guarantees renewable energy projects a fair price for the energy they generate, reducing reliance on fossil fuels.
• Feed-in Tariff (FiT):
  Previously paid small renewable energy producers (like homes with solar panels) for the electricity they generated and fed back to the grid.
• Climate Change Levy (CCL):
  A tax designed to encourage energy efficiency by making users more conscious of their consumption.

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📊 How Are These Charges Calculated?

It depends on how much energy you use and where you’re located:

• Some charges are based on consumption (how many units of electricity or gas you use, measured in kWh).
• Others are calculated based on capacity (the maximum amount of energy you’re set up to use).
• Regional differences apply—network costs can vary depending on where you are in the country.

Since 2022, Ofgem (the UK’s energy regulator) introduced changes through the Targeted Charging Review (TCR) to make the system fairer—so large users don’t avoid paying their share.

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🌍 Supporting the Move to Net Zero

Network charges aren’t just about pipes and wires—they also help the UK reach its Net Zero carbon emissions target. Charges like RO, CfD, and FiT support renewable energy generation, while the CCL encourages energy efficiency.

Without these mechanisms, it would be harder and slower to transition to greener, more sustainable energy.

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📌 Why It Matters to You

Even though network charges can feel invisible, they have a real impact on your bill. Understanding them means:

• You’re better informed about where your money goes
• You can make smarter decisions about energy use
• You’re contributing to a cleaner, more reliable energy future

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🔍 Need Help?

Our energy specialists keep track of changes in non-commodity charges and offer guidance tailored to your business. Whether you’re managing costs or going green, we’re here to help.

Contact us at hello@gleg.co.uk if you’d like a review of your current charges or strategies to improve efficiency.