Non-Commodity Costs Explained: The Hidden Two Thirds of Your Energy Bill

Why network charges and policy levies now make up most of what your business pays for electricity, and what you can do about them.

Non-Commodity Costs Explained – Most business energy buyers spend their time watching the wholesale price, the part of the bill that moves with the gas and power markets.

It matters, but it is no longer the biggest part of what you pay.

On a typical commercial electricity bill the energy itself now accounts for only around a third of the total. The rest is made up of non-commodity costs, the network charges, government levies and other pass-through items that sit on top of the wholesale rate.

This guide explains what those costs are, why they keep rising, and the practical levers a business can pull to keep them under control.

What are non-commodity costs?

Non-commodity costs, often shortened to NCCs or described as third party charges, are everything on your energy bill that is not the raw cost of the gas or electricity.

They pay for moving energy across the network, balancing the grid second by second, and funding government policy on renewables, nuclear and carbon.

For electricity they have crept up year after year.

In 2026-27 the network charges, policy levies and losses together make up close to two thirds of a commercial electricity bill, with wholesale energy making up the rest.

Gas carries far fewer of these charges, which is a big part of why UK businesses pay so much more for power than for gas.

Network charges: DUoS, TNUoS and BSUoS

The first group of non-commodity costs pays for the wires.

Distribution Use of System charges, known as DUoS, cover the local network that delivers power to your site. They are billed by your regional network operator and vary by time of day, with the most expensive Red band landing on weekday late afternoons.

Transmission Network Use of System charges, or TNUoS, pay for the high voltage national grid that carries power across the country. These have risen steeply, with the volume weighted average up by roughly 64 percent in 2026-27 as the grid is rebuilt to connect new offshore wind.

Balancing Services Use of System charges, or BSUoS, cover the cost of keeping supply and demand matched in real time. Together these three are a large slice of the bill and sit mostly outside your control, though not entirely, as we explain below.

Policy and levy costs

The second group funds energy and climate policy. The Renewables Obligation is still the single largest of these, supporting older renewable generation. Contracts for Difference and the Feed-in Tariff support newer and smaller scale renewables. The Capacity Market pays generators and flexible users to be available at peak times, and its cost roughly doubled in 2026-27.

Then there are the taxes. The Climate Change Levy is charged on business energy use, set at 0.801 pence per kilowatt hour for electricity from April 2026 and rising each year.

From December 2025 a new Nuclear Regulated Asset Base charge also appears on bills, helping to fund the construction of Sizewell C. We keep our own current CCL rates page updated each April.

Why non-commodity costs keep climbing

The direction of travel is firmly upward, and it is worth understanding why.

The grid is in the middle of its biggest upgrade in a generation, connecting offshore wind and reinforcing the network for electric vehicles and heat pumps.

That investment lands on TNUoS and DUoS. At the same time the cost of keeping an increasingly weather dependent system in balance is pushing up BSUoS and the Capacity Market.

Because many of these charges are set 12 to 15 months ahead, a well structured contract can lock in a degree of certainty.

But the underlying trend means a business that ignores its non-commodity costs will watch them quietly grow as a share of the bill, even when wholesale prices fall.

How to manage your non-commodity costs

You cannot avoid non-commodity costs, but you can influence several of them.

Shifting consumption away from the most expensive periods is the biggest lever.

Moving load out of the weekday Red band cuts DUoS, and reducing demand during the winter peak windows lowers both Capacity Market and transmission exposure.

Sites with the right flexibility can go further through demand side response, earning revenue for turning down at peak.

Energy intensive manufacturers may qualify for relief schemes that rebate a large share of network and policy costs, and businesses with a climate change agreement can claim up to 92 percent off the Climate Change Levy.

How you buy matters too. Spreading purchases by buying in tranches smooths your exposure to the wholesale element, while clear non-commodity cost reporting makes sure every charge on your bill is correct and validated.

Getting the energy procurement strategy right pulls all of this together.

Get a clear view of your whole bill

Non-commodity costs are complicated by design, and suppliers rarely break them down in a way that makes them easy to challenge.

That is a problem when they account for the majority of what you spend.

At Catalyst we help businesses understand every line of their energy bills, validate the charges, and build a buying and flexibility strategy that controls total cost rather than just chasing the lowest headline unit rate.

If you want to know what is really driving your energy bill, and where the savings are hiding, speak to one of our energy consultants today.

Further reading: Climate Change Agreements Explained shows how energy-intensive sites can cut the Climate Change Levy on their bills by up to 92% through a sector agreement. TNUoS Charges Explained covers why transmission network costs jumped in April 2026 and which parts of the bill your business can still reduce.

Further reading: Capacity Market Charges Explained breaks down the winter peak levy that roughly doubled in 2026 and how to cut your exposure in the weekday evening peak. Feed-in Tariff Levy Explained covers why this closed scheme still reaches your unit rate into the 2030s, years after it shut to new applicants.

Further reading: BSUoS Charges Explained sets out how Balancing Services Use of System costs are recovered and what the move to fixed half-hourly tariffs means for your bill. AAHEDC Explained covers the levy that subsidises electricity in the north of Scotland. Renewables Obligation Explained breaks down the RO charge, still one of the largest policy costs on a business electricity bill.

Further reading: kVA Charges Explained shows how to stop overpaying for available capacity, and Power Factor Correction explains a quick-payback fix for motor-heavy sites that cuts reactive power charges.

Further reading: Contracts for Difference Levy Explained sets out how the CfD scheme funds offshore wind and other low-carbon generation, and why this charge can swing from a cost to a credit on your bill as wholesale prices move. It works alongside the Renewables Obligation as one of the main green-policy levies on business electricity.

Further reading: Contracts for Difference AR8 looks at what the eighth CfD allocation round, opening in July 2026, means for the levy on your electricity bill, and how a record round of offshore wind could push the charge either way as strike prices meet the wholesale market.

Further reading: Standing Charges Explained covers Ofgem’s June 2026 pilot testing lower standing-charge tariffs, the trade-off between a lower fixed daily charge and a higher unit rate, and why the network capacity and metering costs bundled into a business standing charge are worth reviewing independently.

Further reading: National vs Zonal Pricing explains why the government’s July 2025 REMA decision to reject regional zonal electricity pricing keeps a single national wholesale rate, and how regional cost differences are instead being pushed into the network charges that make up your non-commodity costs.