Non-commodity charges, explained in plain English

Here is a fact that surprises most people the first time they see it broken down: on a typical electricity bill, the energy itself — the wholesale commodity — often accounts for barely half of what you pay. The rest is a stack of network costs, government levies and taxes known collectively as non-commodity charges. They are rising, they behave nothing like the wholesale market, and understanding them changes how you read every quote you are given.

The anatomy of a unit rate

When a supplier quotes you a price per kilowatt-hour, that single number is built from several layers. The wholesale cost sits underneath. On top of it are the charges for delivering the energy to you and for funding the wider system. A quote that looks cheap on the headline rate can hide a less favourable treatment of these other costs — which is exactly why comparing suppliers on the wholesale element alone is a mistake.

The two big families

Most non-commodity charges fall into two groups.

Network charges pay for the physical business of moving energy — the transmission grid that carries it across the country, the local distribution networks that bring it to your door, and the cost of keeping the system balanced second by second. You will see these referred to by initials like TNUoS, DUoS and BSUoS. You do not need the acronyms; you need to know they are largely set by where and how you use energy, not by your supplier.

Policy and low-carbon costs fund the transition of the energy system — support for renewable and low-carbon generation, and schemes that pay to keep enough capacity available for peak demand. These are set by government policy and recovered through your bill.

The rest of the stack

On top of those sit a few more items: the Climate Change Levy, a tax applied per unit of energy; metering and administration costs; and VAT applied to the whole lot. Small individually, they add up.

Why they keep rising

Here is the part that matters for planning. Wholesale prices go up and down. Non-commodity charges mostly go one way — up — because the grid needs investment and the low-carbon transition has to be paid for. Even in a year when wholesale prices fall, your all-in cost can hold steady or climb as these charges grow. Anyone budgeting on the wholesale market alone is budgeting on half the picture.

What you can influence — and what you can't

Let us be honest about this, because plenty of people overpromise.

You cannot negotiate the levies or the network tariffs themselves. They are set nationally and applied to everyone.

You can influence how much of them you pay, because most are charged per unit of consumption or linked to your demand. That means:

• Using less reduces almost all of them at once — efficiency is the most reliable lever you have.

• Managing when and how hard you draw power can reduce demand- and capacity-related charges for larger sites.

• Making sure your reliefs and settings are correct matters — the right VAT rate for your usage, any levy relief your sector qualifies for, and an agreed capacity that matches your actual need rather than an inflated historic figure.

None of this is glamorous, but it is real money, and it is money a supplier has no incentive to find for you.

Contract structure changes your exposure

One more thing worth knowing. Some contracts fully fix every element, including the non-commodity charges, giving you complete certainty. Others fix the wholesale part but pass the non-commodity charges through as they change. Neither is automatically better — but you should know which one you are signing, because they behave very differently when those charges rise mid-term.

What to do next

Before you compare a single quote, it is worth understanding the full build-up of your own unit rate — what is wholesale, what is non-commodity, and how your contract treats each. A recent bill and a 10-minute call are enough for us to break it down with you, show you where there is genuine room to act, and make sure you are comparing suppliers on the whole number, not just the headline.