These pay for the infrastructure that delivers energy to your premises. Charge types include: Transmission Network Use of System (TNUoS) which covers costs of transporting electricity across the national grid or gas transmission network; Distribution Use of System (DUoS) which covers costs of managing electricity across the regional and local network that connects to your site; and Balancing Services Use of System (BSUoS) which covers costs of keeping the national grid stable in real time.

In fixed contracts: all non-commodity costs are included in the unit rate, block option option is simplified, and typically, higher rates to account for risk.

In part-fixed contracts: some costs are fixed, others are passed through, and features transparency with stability.

4. Choose your contract wisely

A fixed-rate may protect you from volatility, while a pass-through arrangement may suit higher-usage businesses if non-commodity costs are falling. If you plan to shrink energy use or improve efficiency, make sure you're contracting to suit.

What Are Non‑Commodity Energy Costs?

Q: What Are Non-Commodity Energy Costs?

Non-commodity energy costs are the third-party charges included in every business gas and electricity bills. Instead of paying for the power you consume, these costs cover the infrastructure, governance, policy schemes and anything else needed to operate the UK energy network. Key components include: third-party costs (TPCs), network and balancing costs, and non-energy costs. Across most UK businesses, non-commodity costs now account for 50-60% of the total bill. Depending on your contract type and location, that proportion can vary.

Q: Why Are Non-Commodity Costs Important?

Non-commodity charges impact your business because: they can account for more than half the bill (in fact, around 50-60%) so you can't just off-leases on UK suppliers network charges and supply costs. They affect the total energy bills you'll face which can support and impact operational budgeting expenses. They vary between fixed and pass through contracts. They often change mid-budgeting, each year. This, especially in years if energy-intensive businesses. Understanding these charges helps you compare quotes like-v and avoid getting locked into contracts with unpredictable final costs.

Q: What Makes Up Non-Commodity Energy Costs?

Non-commodity costs are grouped into three main categories: network charges, system and balancing charges, and government levies and policy schemes.

Q: 3. Government Levies and Policy Schemes

These are charges imposed to fund the UK's environmental targets and social support. Common examples include: Contracts for Difference (CfD), Feed-in Tariff (FiT), Renewables Obligation (RO), Climate Change Levy (CCL), and Faraday Tariff (FT). These costs have grown significantly over the past decade as the UK continues its transition toward cleaner energy and the phased shift to renewable energy platforms.

Q: How Are Non-Commodity Costs Calculated?

How non-commodity costs are calculated depends on several factors: your consumption (kWh) usage, your demand (especially in more kW time usage), your contract type (pass through or fully fixed contract), your region (DUoS varies across the UK), and your site type or tariff structure. Not all quote providers charge non-commodity costs consistently between other than fluctuations even when usage stays the same.

Q: Are Non-Commodity Charges Included in My Energy Quotes?

It depends on the contract. Here's a quick comparison between fixed contracts, pass-through contracts, and part-fixed contracts.

Q: Pass-Through Contracts

In pass-through contracts: you pay the real cost of each charge as it changes, more transparent but less predictable, and often beneficial when non-commodity costs are consumption.

Non‑commodity energy costs now make up most of your business electricity bill. Understanding these charges helps you budget accurately, compare supplier quotes properly and identify opportunities to reduce your overall expenditure.

This guide explains what non‑commodity costs are, how they’re calculated and what you can do to manage them.

What Are Non-Commodity Energy Costs?

Non‑commodity energy costs are the non‑energy charges in your business gas and electricity bills. Instead of paying for the power you consume, these costs cover the infrastructure, maintenance, policy schemes and anything else required to operate the UK’s energy network.

They are sometimes called:

Third‑party costs (TPCs)
Pass‑through charges
Non‑energy costs

Across most UK businesses, non‑commodity costs now account for 50-60% of the total bill, depending on your contract type and consumption patterns.

Why Are Non-Commodity Costs Important?

Non‑commodity charges impact your business because:

They’re outside your supplier’s control, so they rise and fall based on UK regulation, network charges and market conditions.
They can increase the total cost of your contract even when wholesale prices fall.
They vary between fixed and pass‑through contracts.
They affect long‑term budgeting and cash flow, especially for energy‑intensive businesses.

Understanding these charges helps you compare quotes fairly and avoid getting locked into contracts with unexpected cost increases.

What Makes Up Non-Commodity Energy Costs?

Non‑commodity costs fall into three categories:

1. Network Charges

These pay for the infrastructure that delivers energy to your premises.

Charge Type	What It Covers
Transmission Network Use of System (TNUoS)	Costs of transporting electricity across the national grid
Distribution Use of System (DUoS)	Local network maintenance and upgrades
Gas Transportation Charges	Upkeep of the UK gas pipeline system

2. System and Balancing Charges

These support the stability and reliability of the UK energy system.

Charge Type	What It Covers
Balancing Services Use of System (BSUoS)	The balancing of supply and demand in real time
Capacity Market Charges	Incentives to ensure long‑term energy security
Ancillary Services	Frequency response, reserve services and other mechanisms that keep the grid stable

3. Government Levies and Policy Schemes

These support decarbonisation, efficiency and social objectives.

Common examples include:

Contracts for Difference (CfD)
Renewables Obligation (RO)
Climate Change Levy (CCL)
Feed‑in Tariff (FiT)
Hydro Benefit/Assistance for Areas with High Electricity Distribution Costs

These costs have grown significantly over the past decade as the UK continues its transition toward cleaner energy.

How Are Non‑Commodity Costs Calculated?

Your non‑commodity charges depend on:

Your consumption (kWh used)
Your demand patterns (especially peak‑time usage)
Your contract type (pass-through or fully fixed contract)
Your meter type (half‑hourly vs non‑half‑hourly)
Your region (DUoS varies across the UK)

Because several elements change over time, businesses often see fluctuations even when usage stays the same.

Are Non‑Commodity Charges Included in My Energy Quotes?

It depends on the contract. Here’s a quick comparison:

Fixed Contracts

All non‑commodity costs are included in the unit rate
Most stable option for budgeting
Typically, higher rates to account for risk

Pass‑Through Contracts

You pay the raw cost of each charge as it changes
More transparent but less predictable
Often preferred by businesses with large consumption

Part‑Fixed Contracts

Some costs are fixed, others are passed-through
Balances transparency with stability

Can I Reduce My Non‑Commodity Energy Costs?

You can’t eliminate them, but you can reduce their impact:

1. Reduce consumption at peak times

Network charges are often higher during evening peaks. Shifting load can lower DUoS and BSUoS charges.

2. Improve energy efficiency

Energy saving measures include:

LED lighting
Smart heating controls
Power management systems

3. Introduce on-site generation

Solar, battery storage or combined heat and power (CHP) can reduce reliance on the grid.

4. Choose the right contract

A fixed deal may protect you from volatility, while a pass‑through arrangement may suit higher‑usage businesses with flexibility. It’s always worth comparing business energy tariffs before committing to one.

5. Conduct regular energy audits

A business energy audit identifies waste, poor asset performance and opportunities to reduce overall usage.

In Summary

The trend over the past decade has been consistent: non‑commodity costs have risen steadily. As the UK invests further in renewable energy, grid upgrades and decarbonisation, these charges are likely to remain a significant part of business electricity and gas bills.

Non‑commodity costs are no longer a bonus line on your business energy bill - they’re now one of the biggest factors in total cost. By knowing what they cover, how they’re charged and how to manage them, your company can make more informed decisions and avoid unexpected price swings.