GLEG

Energy Glossary

UK Business Electricity – Non-Commodity Charges

Non-commodity charges are the non-energy elements of a business electricity bill. These cover the cost of running, maintaining and decarbonising the UK power system. For many organisations, non-commodity costs now make up over half of the total electricity cost.
 
Why These Charges Matter
 
For large electricity users, non-commodity costs are often less negotiable than the wholesale commodity price and increasingly driven by:
  • decarbonisation policy
  • network reinforcement and flexibility needs
  • new hydrogen and carbon-capture infrastructure
  • eligibility (or not) for levy-relief schemes
Understanding these charges is critical for accurate forecasting, budgeting and long-term energy strategy.
 

1. Network & System Costs

TNUoS (Transmission Network Use of System)
Charges for operating and maintaining the high-voltage transmission network.
 
DUoS (Distribution Use of System)
Regional charges for using local electricity distribution networks.
 
BSUoS (Balancing Services Use of System)
Costs of balancing supply and demand in real time to keep the grid stable.
 

2. Policy & Environmental Levies

Contracts for Difference (CfD)
Funds low-carbon generation projects through top-up payments.

Renewables Obligation (RO)
Legacy support for renewable generators, still paid by end users.
 
Capacity Market (CM)
Supports security of supply by paying generators to provide capacity.
 
Climate Change Levy (CCL)
A government tax on business electricity and gas use to encourage efficiency.
 

3. Fixed & Standing Charges

Standing, capacity and site-specific charges that reflect network capacity and cost allocation reforms under Ofgem’s Targeted Charging Review.
 
Emerging & Related System Costs
These schemes are not always direct line items on today’s bill, but they shape the future cost base of the electricity system and influence non-commodity charges.
 

4. Dispatchable Power Agreements (DPA)

Government support contracts for low-carbon, “on-demand” power (e.g., gas-CCS). They ensure reliable flexible generation and may influence future system and balancing costs.
 

5. British Industrial Competitiveness Scheme (BICS)

A new scheme (from 2027) that provides major levy exemptions for electricity-intensive industries. Eligible businesses will see reduced RO, FiT and CM charges; non-eligible users may carry a greater share of system costs.
 

6. Transmission Infrastructure Discount

A bill-discount scheme for households living near new transmission lines. Although targeted at domestic users, it signals increasing transmission investment that will influence future network tariffs for businesses.
 

7. Low Carbon Hydrogen Agreement (LCHA)

Revenue support for low-carbon hydrogen production. As hydrogen production grows, associated infrastructure and system requirements could lead to future hydrogen-related levies or network upgrades borne by electricity users.
 

8. Industrial Carbon Capture (ICC) / CCUS Business Models

Business models supporting carbon capture and CO₂ transport & storage. These major infrastructure programmes may result in future system-wide charges or levies, particularly for energy-intensive industries.

 

 
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