What Actually Makes Up Your Business Energy Bill?
The different charges that you should be aware of – and where things may be increasing in ’26-’27.

At Go Low Carbon, we’ll always strive to broker energy contracts that are best suited to your business’s unique situation. We’re committed to doing this in a transparent and easy-to-understand way.

In an ideal world, we’d sit down with you over a cuppa to discuss the inner workings of your contract, but, given we’re all running busy schedules, we’ve decided to elaborate below.

 

Currently, only around 36p of every £1 spent pays for electricity itself. The remaining 64p funds infrastructure, balancing and government policy.

Most business owners assume their electricity bill mainly pays for electricity.

In reality, only about one-third of the price caters to the energy itself. The rest goes towards maintaining the grid, balancing supply and demand, and funding the UK’s transition to cleaner power.

Understanding this can help you make smarter decisions when choosing an energy contract.

 

Commodity vs Non-Commodity Charges

Your electricity price is made up of two main parts.

Commodity costs

These relate to the actual electricity you consume – typically notated as a unit rate (price per kWh).

Suppliers buy power from generators (wind farms, gas plants and nuclear stations) on the wholesale market and pass that cost on to you as a business owner, charging by the unit consumed.

When you select a contract, for the most part, the unit rate will be a fixed element i.e. it will not change for the duration of your contract. In general, commodity prices that affect unit rate change frequently because they’re influenced by things like:

• Global gas prices
• Weather and renewable output
• Electricity demand
• Global events affecting energy markets

Today, commodity costs account for around 30 – 40% of a business’s electricity bill.

Non-commodity costs

These make up everything else on your bill.

These charges cover the development and maintenance of grid infrastructure and other systems needed to deliver electricity to your business.

They include things like:

• Maintaining the national grid
• Operating the electricity system
• Supporting renewable energy projects
• Government policy and taxes

These costs are set by regulators and the government, not your energy supplier, or us, your energy broker.

At the moment, they make up roughly 60–65% of a typical UK business electricity bill – but indicators are that many of them are set to increase further over the coming couple of years.

The Main Non-Commodity Charges To Be Aware Of

Network costs

These pay for the infrastructure that physically delivers electricity to your premises.

These include:

• TNUoS – Transmission Network Use of System: The charge supports the high-voltage national transmission grid that moves electricity around the country. This charge is typically a fixed annual charge per site, but can remain variable in some cases. Of late, TNUoS charges have increased dramatically to support the expansion of the grid to accommodate renewable technologies.
• DUoS – Distribution Use of System: This largely variable charge supports local distribution networks through the DNO (District Network Operator). Maintenance and upkeep of cables, sub-stations, transformers, etc., are all included – key infrastructure that delivers power to businesses and homes. Of late, this aspect of energy bills has risen due to increased electrification and local grid reinforcement.

These are some of the highest costs on modern energy bills; they’ve been on the increase… and are expected to continue on that path as the UK further expands the grid for renewable energy. One key milestone for these increases is April 2026 – TNUoS is expected to rise by 90-120%.

There are also Transmission and Distribution losses: a small portion of your bill (3-4%) is dedicated to compensating for the loss of electricity through heat when travelling through the network. This is typically a stable charge.

System operation costs

BSUoS – Balancing Services Use of System: Electricity supply and demand must stay balanced every second; this is funded by an unavoidable charge within your bill that currently accounts for around 6.5% of the total.

Capacity Market Charge: This charge relates to management during times of peak demand on the grid – essentially avoiding overload that may cause blackouts.  Again, this charge is unavoidable, and it is predicted to increase in 2026-27 by up to 100%.

All in all, the system operation costs are about the stability of the UK’s electrical infrastructure. If each business did not contribute, then we’d all be subject to a very inconsistent supply.

2026-‘27’s increases in some of these elements are going to be tangible, unavoidable and impactful, but they are necessary to ensure there are appropriate advances and developments in the country’s electrical infrastructure.

Government & environmental policies

Some charges fund the UK’s transition to low-carbon energy.

These include schemes that support:

• Renewable energy projects
• Small-scale solar installations
• Energy efficiency policies

Included within these charges are:

Renewables Obligation (RO): This supports some of the original large-scale renewable projects and is decreasing in impact

Contracts for Difference (CfD): This guarantees renewable generators a fixed price for electricity.

Feed-in Tariff (FiT): Supports small-scale renewables like rooftop solar; again, the impact is decreasing as the scheme closed in 2019

Climate Change Levy (CCL): A tax on energy designed to incentivise efficiency

Nuclear RAB Levy: This charge funds the construction of new nuclear plants

These policy costs are built into business electricity bills and are applied nationwide.

 

Why All Of This Matters When Choosing an Energy Contract:

In the past, most business energy contracts were fully fixed.

This meant both the electricity price and the additional charges were fixed for the entire contract term.

However, after the energy crisis and rising infrastructure costs, many suppliers have been quietly evolving their products, and many now offer different pricing structures:

Fully Fixed Tariffs

Both the energy cost and the additional charges are fixed for the contract term.

Best for: businesses that want predictable bills and easier budgeting.

Partially Fixed Tariffs

Some costs are fixed, while others (usually network charges) can change during the contract.

Best for: businesses comfortable with the concept of risk relating to some price movement.

Pass-Through / Variable Tariffs

Only the wholesale electricity cost is fixed. Other charges can increase or decrease during the contract at little or no notice.

These tariffs often look cheaper initially, but they can lead to unexpected price changes later on.

The General Landscape Today

As mentioned, historically, suppliers typically offered a fully-fixed tariff, whereby both the commodity and non-commodity costs were bundled into the unit rate, which remained fixed for a set term of 1 to 5 years.

However, with the forecasted surge in network costs, several suppliers have chosen to separate out certain non-commodity costs from the unit rate and now charge them as separate line items. Typically, these costs are not fixed and can change throughout the contract period.

Which Non-Commodity Costs Are Usually Passed Through

Suppliers that separate costs usually pass through:

• Network charges
• DUoS (distribution)
• TNUoS (transmission)
• Feed-in Tariff
• Reactive power charge

These charges currently make up about 64% of a typical business electricity bill – but, with the proposed 2026-’27 increases factored in, the non-commodity costs within your contract could easily exceed 70% contribution.

 

Go Low Carbon’s Position

At Go Low Carbon, we’ll always do our best to guide you through the nuances and granular elements of your contract options. However, as previously stated, busy schedules occasionally impact the conversation time available. With that in mind, we’d always encourage you to thoroughly review and digest any energy contract that arrives to you via our Customer Care Team. If there are terms, clauses, or notations that you do not fully understand, or require clarity on, please do not hesitate to call us directly – we’d be happy to explain in a short phone call.

We’re here to help: 01228 830850.