What are non-commodity costs on a business energy bill?

Wholesale energy is only part of what a supplier charges you for. The rest is a collection of separate costs for moving electricity and gas to your premises, keeping the network balanced, and funding government and industry schemes, most of which have nothing to do with how much energy you actually use. These are usually grouped together as non-commodity costs. This guide sets out what each one is, who administers it, and how it reaches your bill.

What counts as a non-commodity cost?

Anything on your bill that is not the wholesale price of the electricity or gas itself. Our guide to how wholesale energy prices work covers the commodity side. Non-commodity costs sit on top of it, and typically fall into four groups:

Group	What it covers	Examples
Network charges	Moving energy from generators to your premises	DUoS, TNUoS, and their gas equivalents
Balancing and system costs	Keeping supply and demand matched in real time	BSUoS, the Capacity Market
Environmental and social schemes	Government and industry support for low-carbon generation and energy efficiency	CfD, the Renewables Obligation, Feed-in Tariffs
Tax and other charges	Government levies and supplier costs	Climate Change Levy, metering, supplier operating costs and margin

Ofgem’s own glossary for non-domestic energy customers describes wholesale costs as roughly half of a typical business bill, with these non-commodity elements making up most of the rest, alongside supplier costs and margin. The exact split varies with your contract, your usage profile and how much of your bill is metering and admin.

Quick reference: who administers what

Charge	Fuel	Who administers it	What it funds
DUoS	Electricity	Your regional DNO	The local distribution network
TNUoS	Electricity	NESO	The national transmission network
BSUoS	Electricity	NESO	Real-time balancing of supply and demand
Capacity Market	Electricity	NESO (EMR Delivery Body)	Retainer payments for guaranteed future capacity
CfD Supplier Obligation	Electricity	Low Carbon Contracts Company	Contracts for Difference payments to low-carbon generators
Renewables Obligation	Electricity	Ofgem	Support for accredited renewable generation
Feed-in Tariffs	Electricity	Ofgem	Payments to small-scale renewable generators under closed scheme
Climate Change Levy	Electricity and gas	HMRC	General taxation, with a stated environmental purpose
Gas transportation charges	Gas	National Gas and regional gas distributors	The national and local gas networks

This is a reference point, not an exhaustive list. Your bill may also include metering charges, supplier administration costs and, where you switched through a broker, a broker fee, none of which are government or industry schemes.

What is DUoS?

Distribution Use of System (DUoS) charges pay for the local network of cables and substations that carries electricity the last leg to your premises. National Grid Electricity Distribution, one of Great Britain’s regional electricity distributors, describes DUoS as covering “the costs of maintaining the distribution networks supplying electricity.” Each of the 14 regional Distribution Network Operators (DNOs) publishes its own charging statement, because local networks differ in age, geography and how much investment they need.

DUoS is commonly billed using time bands, often described as red, amber and green, that make electricity more expensive to use at peak demand periods, typically weekday early evenings, and cheaper overnight and at weekends. Not every DNO uses identical band hours, so check your own bill or your supplier for the times that apply to your site. This structure is designed to encourage businesses to shift flexible demand away from the network’s busiest periods, and it is one of the few non-commodity costs a business can influence through its own behaviour, alongside its agreed supply capacity.

What is TNUoS?

Transmission Network Use of System (TNUoS) charges pay for Great Britain’s high-voltage transmission network, the national backbone that carries electricity in bulk from power stations to the regional distribution networks. NESO, which now runs this charging regime, explains that TNUoS charges “recover the costs associated with installing and maintaining” the transmission system across England, Wales, Scotland and offshore.

Generators pay TNUoS based on their connected capacity, and suppliers pay based on the demand of the customers they serve, with tariffs varying by the geographical zone a site is connected in. NESO publishes final tariffs annually by 31 January, to take effect from the following 1 April, with draft figures and forecasts published earlier in the cycle so suppliers can plan ahead.

What is BSUoS?

Balancing Services Use of System (BSUoS) charges recover what it costs NESO to keep the grid balanced from one moment to the next. NESO describes BSUoS as covering “the cost of day-to-day operation including the cost of balancing the electricity transmission system,” which includes paying generators and demand-side providers to adjust their output through the Balancing Mechanism, plus other ancillary services that keep the system stable.

Since April 2023, BSUoS has used a fixed tariff model. A change to the industry rules, CMP361, introduced an “ex-ante fixed BSUoS tariff” set in advance for each six-month period, and another change, CMP308, moved the cost of BSUoS onto final demand only, so generators no longer pay it directly. In practice this means your supplier pays a published rate per MWh of demand, which changes twice a year rather than moving with every half-hourly balancing action.

What is the Capacity Market and why does it appear on my bill?

The Capacity Market pays some generators and demand-side providers to guarantee they will be available at the times electricity supply is tightest, funded by a charge added to electricity bills. NESO runs the scheme as the Electricity Market Reform Delivery Body, and describes its purpose as making sure Great Britain “has enough electricity to meet future demand” at the lowest reasonable cost to consumers.

Capacity is secured through auctions, held roughly a year and four years ahead of the delivery period, using a descending-clock format where NESO works down through bids until it has secured the capacity it needs at the lowest price. Winning providers are paid a retainer to be available; in exchange, suppliers pay a Capacity Market charge that recovers the cost of those retainer payments, typically based on your demand at system peak times.

What is the Contracts for Difference (CfD) scheme?

CfD is the government’s main way of supporting new low-carbon electricity generation, funded by a levy on electricity suppliers. The Low Carbon Contracts Company (LCCC) is the counterparty to every CfD contract: it collects a fixed price from consumers via suppliers and pays generators the difference between that price and the market price they actually achieve, in either direction. LCCC funds this through the CfD Supplier Obligation levy, charged to electricity suppliers in pence per MWh of electricity they supply, with rates set and published in advance on a quarterly basis.

Because CfD payments can run in either direction, in periods of very high wholesale prices, successful CfD generators can end up paying money back through their contracts rather than being paid, which can reduce the net cost of the scheme. The levy rate itself is what appears, indirectly, in your bill.

What is the Renewables Obligation (RO)?

The Renewables Obligation requires electricity suppliers to source a proportion of their electricity from renewable generation, or pay a penalty, with the cost passed through to customers. Ofgem, which administers the scheme, explains that suppliers must present a set number of Renewables Obligation Certificates (ROCs) for each megawatt hour they supply, sourced from accredited renewable generators, or pay into a buy-out fund instead. Money paid into the buy-out fund, after administration costs, is redistributed back to suppliers who did present ROCs.

The RO closed to new renewable generating capacity from 1 April 2017, but it continues to apply to accredited existing generation and remains a live cost on supplier obligations, and therefore on bills, until those existing contracts run their course.

What are Feed-in Tariffs (FIT), and why do I still pay for a closed scheme?

Feed-in Tariffs paid small-scale renewable generators, such as households and small businesses with solar panels, for the electricity they generated, and the scheme’s costs are still shared across all suppliers even though it is closed to new applicants. Ofgem confirms the FIT scheme closed to new applications from 1 April 2019. Existing accredited installations continue to receive payments under their original terms.

The cost of those ongoing payments is spread across all licensed electricity suppliers in Great Britain through a process called levelisation, in proportion to each supplier’s share of the electricity market. Suppliers then recover this cost from their customers, which is why the closed scheme still shows up, in effect, on current bills.

What is the Climate Change Levy (CCL)?

The Climate Change Levy is a tax on the energy businesses use, charged per kWh on both electricity and gas, unless an exemption or discount applies. From 1 April 2025, HMRC’s main rates are 0.775p/kWh for both electricity and gas, rising to 0.801p/kWh from 1 April 2026, and an announced 0.827p/kWh from 1 April 2027. Holders of a Climate Change Agreement can get a 92% discount on electricity and 89% on gas. Because CCL is a straightforward per-kWh tax rather than a scheme with a complex charging basis, it is usually the easiest non-commodity cost to spot on your bill. Our Climate Change Levy guide covers exemptions, reduced rates and how to claim a Climate Change Agreement discount.

How do gas non-commodity costs differ?

Gas has its own equivalents of some of these charges. National Gas charges for use of the national transmission system, and the regional gas distribution networks charge separately for moving gas the final distance to your premises, in a similar way to DUoS for electricity. The Climate Change Levy applies to gas as well as electricity. However, CfD, the Renewables Obligation, Feed-in Tariffs and the Capacity Market are electricity-only schemes, because they exist to support and balance electricity generation specifically.

Can these costs change during your contract?

It depends on how your contract is priced. Ofgem’s glossary distinguishes fully fixed contracts, where the supplier estimates and bakes in these costs for the term, from pass-through contracts, where some or all of them are charged at their actual cost and can move your bill even though your energy price is fixed. Our guide to fixed versus flexible business energy contracts explains this distinction in more detail, including what to check in your contract’s principal terms before you sign.

Because several of these charges (TNUoS, BSUoS and the Capacity Market in particular) are reset on an annual or twice-yearly cycle by bodies outside your supplier’s control, even a fully fixed contract’s underlying cost base can shift from one contract year to the next, which is one reason renewal quotes do not always move in line with wholesale prices alone.

How can you see these costs on your own bill?

Not every supplier itemises each of these charges separately; some fold them into a single non-commodity or “third-party costs” line. If you want a full breakdown, ask your supplier directly, since Ofgem’s best-practice guidance encourages suppliers to make non-domestic billing transparent. Our guide to reading a business energy bill explains what to look for line by line, and our guide to unit rates and standing charges explains how these costs typically get folded into the two headline figures on your quote.

When you are ready to see how these costs come together in an actual quote, you can compare business energy quotes with us.

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