Non-Commodity Costs Explained: A Guide to UK Business Electricity Charges

If you are reviewing a business electricity bill, the wholesale energy price is only part of the picture. A large share of the total cost now sits in non-commodity charges, also known as third party charges or non-energy costs. These are the policy, network and system charges that sit alongside the unit price for power and can have a major impact on total spend. In your February 2026 pricing snapshot, commodity made up 38% of the total 12-month price, while the rest was made up of non-commodity elements such as RO, TNUoS, DUoS, BSUoS, CfD, FiT, Capacity Market, ESL and Nuclear RAB.

For UK businesses, understanding non-commodity costs matters for three reasons. First, they are a growing part of electricity pricing. Second, many of them reconcile after initial billing, which can create unexpected adjustments. Third, they are influenced by regulation, network investment and government energy policy, not just wholesale market conditions.

Non-commodity costs are the costs on an electricity bill that are not the wholesale cost of buying power. They generally fall into two groups: network and security of supply charges and environmental or policy charges. The forecast document separates them in exactly this way, which is the right structure for an SEO guide because it matches how buyers search for these topics and how suppliers recover them in practice.

Transmission Network Use of System (TNUoS)

TNUoS recovers the cost of building, maintaining and operating the national transmission network. For half hourly demand sites, locational costs have historically been linked to TRIAD demand, while both HH and NHH sites now also face standing charges that became the main recovery method from April 2023. The forecast notes that the first RIIO-T3 actuals for 2026/27 were published and represent an average increase of around 60% above 2025/26 rates, although the impact was lower than expected because Ofgem decided to phase the costs.

Distribution Use of System (DUoS)

DUoS covers the cost of moving electricity across regional distribution networks. Charges vary by DNO region, site voltage, meter type and tariff structure. The forecast explains that all DNOs have published 2027/28 DUoS charges and that revenues across most regions have increased compared with 2026/27, with costs redistributed across both standing charges and unit rates.

Balancing Services Use of System (BSUoS)

BSUoS is used by NESO to recover the cost of balancing the electricity system. That includes the actions needed to keep supply and demand aligned in real time. The forecast states that final BSUoS tariffs for April 2026 to March 2027 were published in December 2025, at £13.74/MWh for summer and £12.49/MWh for winter, with rates slightly above the earlier draft.

Assistance for Areas with High Electricity Distribution Costs (AAHEDC)

AAHEDC, often referred to as the hydro benefit, is a small socialised levy that helps support the higher cost of distributing electricity in Northern Scotland. It is spread across electricity users in Great Britain, which makes it a relatively small and stable part of non-commodity cost.

Capacity Market (CM)

The Capacity Market is designed to support security of supply by paying for backup generation and demand side response. Unlike many other third party charges, CM costs apply to demand during specific peak windows, typically 16:00 to 19:00 on working days from November to February. The forecast expects CM rates to rise materially from April 2026, driven by high auction outcomes, including a £65/kW/year T-4 clearing price for 2028/29 delivery. The levies page also strengthens this section by explaining that CM is usually shown either within third party charges or under a separate capacity market label on bills.

EII Support Levy (ESL)

The EII Support Levy funds compensation for eligible Energy Intensive Industries through the Network Charging Compensation Scheme. From April 2026, EIIs can claim back up to 90% of network costs, up from the earlier 60%, and the forecast says this is expected to push ESL rates higher. For suppliers and non-exempt customers, it becomes another growing item within the wider non-commodity stack.

Climate Change Levy (CCL)

CCL is a government tax on business energy use. Domestic users do not pay it, but non-domestic users do, unless they qualify for relief such as a Climate Change Agreement discount. Your levies page makes this useful distinction clearly and also shows CCL as a separate bill line for business users, which is worth keeping because it matches how many customers recognise the charge in practice.

Renewable Obligation (RO)

RO was introduced to support large scale renewable generation through Renewable Obligation Certificates. Although the scheme is closed to new capacity, it still remains a major cost on business electricity bills because accredited generators continue to receive support over long contract periods. The forecast notes that there was no mutualisation for 2024/25, so there were no additional consumer costs for that compliance period, and it also notes that from April 2026 the inflation basis is expected to shift from RPI to CPI, which should slow cost growth compared with previous assumptions.

Renewable Energy Guarantees Origin (REGO)

The Renewable Energy Guarantees of Origin (REGO) scheme, run by Ofgem, helps you see how much of the electricity you use comes from renewable sources.

Renewable generators earn one REGO certificate for each MWh of renewable electricity they produce. When suppliers buy renewable electricity, they also get these certificates. At the end of the year, suppliers submit their REGOs to Ofgem. Ofgem records the total in the Renewable and CHP register, showing how much renewable electricity each supplier has provided.

This system supports Fuel Mix Disclosure (FMD), which means suppliers must tell customers the mix of fuels – coal, gas, nuclear, renewable, and others – used to generate the electricity they supply.

Feed-in Tariffs (FiT)

FiT supported small scale low carbon generation and closed to new applicants in 2019, but it still remains on bills because legacy projects continue to be paid. The forecast states that FiT Year 15 out-turned at approximately £1.8bn, giving an actual rate of £7.50/MWh for 2024/25. Like RO, FiT is also expected to move from RPI to CPI indexation from April 2026, which should reduce the pace of future uplift.

Contracts for Difference (CfD)

CfD is now the main support mechanism for large scale low carbon generation. Generators receive a top-up when wholesale prices are below the strike price and pay back when wholesale prices rise above it. The forecast says Allocation Round 7 will deliver 14.7GW of new low carbon generation, up from 9.6GW in AR6, which signals the continuing central role of CfD in UK power policy. Your levies page also helps by breaking out the levy structure more clearly into the interim levy rate, reserve amount and operational costs.

Nuclear RAB

Nuclear RAB is one of the newest items on the bill. It was introduced to fund future nuclear projects, starting with Sizewell C, and began recovering costs from December 2025. The forecast explains that the charge includes an Interim Levy Rate, a Total Reserve Amount and an Operational Costs Levy. It also notes that the updated ILR for April to June 2026 was published at £4.683/MWh by LCCC. The levies page is useful here too because it positions Nuclear RAB as a separate levy line for business billing from autumn 2025 onward.

Fossil Fuel Levy (FFL)

FFL is largely historical in this context. Your levies page makes clear that it is now set at zero and no longer generally affects bills, but it is still worth referencing briefly in the guide because some users still search for old levy names when trying to decode business electricity costs.

One of the most important sections in the forecast is the breakdown of how each charge is treated commercially. Some items are fixed for the duration of contract and wrapped into the supplier unit rate or standing charge. Others are passed through and later reconciled. The document also shows that charges are recovered against different consumption bases, including MSP, GSP and NBP consumption, which is why invoice validation can be complex and why billed costs do not always line up neatly with meter reads alone. TNUoS is typically reconciled annually, BSUoS monthly, FiT annually in October, CfD annually in January, and ESL quarterly.

The forecast gives several clear reasons. Transmission costs are rising with infrastructure investment under RIIO-T3. Distribution charges are increasing as DNOs recover more revenue and reshape tariff structures. Capacity Market costs are moving up following stronger auction prices. Nuclear RAB adds a new policy cost layer. Environmental schemes such as RO, FiT and CfD remain material because the UK is still funding the transition to lower carbon generation through electricity bills.

The upcoming changes section is especially useful for forward-looking SEO content. It highlights three areas to watch. First, the British Industrial Competitiveness Scheme could exempt some advanced manufacturing businesses from CM, FiT and RO costs from April 2027, which would increase the burden on non-eligible users. Second, proposed AI Growth Zones could introduce targeted bill discounts for data centres in high-generation, low-demand regions, with some of the cost socialised across other bill payers. Third, RIIO-ED3 from April 2028 is expected to create further DUoS pressure as distribution investment increases.