Non-Commodity Electricity Charges: An Updated View of Costs and Forecasts

As the UK electricity market continues to evolve, the costs beyond wholesale electricity are becoming harder for businesses to overlook. We take an updated look at what’s driving non-commodity charges, how they’re expected to change and what this means for businesses planning for 2027 and beyond.

When it comes to managing electricity costs, much of the attention naturally falls on wholesale prices and securing a competitive energy contract. But the price of electricity itself is only part of what businesses pay.

The rest of the bill includes a range of non-commodity charges that cover everything from maintaining the electricity networks to balancing supply and demand and supporting government energy policies.

With significant investment planned across Britain’s electricity infrastructure and changes to how certain costs are recovered, these charges are playing an increasingly important role in business energy expenditure.

So, what does the latest outlook tell us, and what should businesses be considering as they plan ahead?

A business electricity bill is made up of wholesale energy costs and a range of additional charges, generally grouped into three categories:

As the chart shows, wholesale electricity is just one component of the overall unit rate, and the balance between wholesale and non-commodity costs has changed considerably over time.

This helps explain why a fall in wholesale prices doesn’t always translate into an equivalent reduction in electricity bills. While wholesale prices respond to energy market conditions, non-commodity charges are influenced by a wider range of factors, many of which operate over much longer timescales.

For businesses, it’s an important distinction. Focusing on the wholesale price alone can give an incomplete picture of both current electricity costs and what to expect in future.

There isn’t one single reason why non-commodity costs are changing. Different charges respond to different pressures, although several developments are shaping the overall outlook.

Investment in electricity infrastructure is one of the biggest factors. As Great Britain connects more renewable generation and electricity demand evolves, transmission and distribution networks need to be reinforced and expanded. The costs of maintaining and developing this infrastructure are recovered through network charges, including TNUoS and DUoS.

At the same time, balancing the electricity system remains a significant cost. The National Energy System Operator (NESO) manages electricity supply and demand in real time, including the challenges created by network constraints and changing generation patterns. These activities are funded through BSUoS charges, which are forecast to increase notably in 2027/28.

Government energy policies also play a role. Schemes such as Contracts for Difference (CfD) support investment in low-carbon generation, while the Capacity Market helps ensure sufficient electricity capacity is available when needed. More recently, the Nuclear Regulated Asset Base (RAB) charge was introduced in December 2025 to support the development of Sizewell C.

Together, these developments help explain why non-commodity charges can follow a very different path from wholesale electricity prices.

It’s not just the level of non-commodity costs that’s changing. The way some of these charges are calculated has also shifted.

Historically, a greater proportion of network costs was linked to how much electricity a business consumed or when it used electricity. However, reforms introduced through Ofgem’s Targeted Charging Review (TCR) have moved certain network charges towards a fixed charging structure.

Rather than being determined solely by consumption, these charges can depend on factors such as a site’s charging band and connection characteristics.

The chart highlights how fixed charges have become a more prominent part of the non-commodity cost structure.

For businesses, this changes the relationship between electricity consumption and overall expenditure. Reducing energy usage remains an important way to manage costs, but it won’t necessarily reduce every charge on the bill.

This is particularly relevant for energy-intensive businesses and organisations with multiple sites, where connection arrangements and fixed network charges can have a significant financial impact.

It also makes reviewing charging classifications and agreed capacity an important consideration, particularly where a site’s electricity requirements have changed over time.

Looking ahead, the forecasts point to further increases in some of the main components of non-commodity electricity costs. Two areas in particular help illustrate the scale of the changes businesses may need to plan for.

Transmission and distribution charges fund the electricity networks that transport power across Great Britain and deliver it to homes and businesses. With substantial investment needed to maintain and develop this infrastructure, network costs are expected to rise over the coming years.

The forecast shows a particularly sharp increase from 2027/28, with the combined unit-rate equivalent reaching approximately 9p/kWh in 2028/29 and remaining around this level through to 2030/31.

For businesses, however, the impact won’t be uniform. Network charges can vary depending on location, connection arrangements, agreed capacity and electricity demand, meaning two businesses with similar consumption levels may face different costs.

Alongside network costs, government taxes and policy-related levies continue to contribute to business electricity bills.

These charges help fund a range of initiatives, from renewable electricity generation to low-carbon infrastructure. Their costs are shaped by policy decisions, scheme requirements and, in some cases, wholesale market conditions.

Although the forecast includes some fluctuations, the longer-term trend is upward, with taxes and levies reaching approximately 7p/kWh by 2030/31. This suggests policy-related costs will remain a significant consideration for businesses, even as individual support schemes change over time.

While both charts show an upward overall trajectory, not every non-commodity charge is forecast to increase at the same rate, or even move in the same direction.

For example, BSUoS costs are forecast to rise sharply in 2027/28, while CfD costs are expected to become more prominent but remain sensitive to wholesale electricity prices. Meanwhile, legacy schemes such as the Renewables Obligation and Feed-in Tariff have a different longer-term outlook as their support arrangements mature.

This is why looking at the overall non-commodity cost forecast is only part of the picture. Understanding the individual charges, and what’s driving their movements, can provide a much clearer view of future electricity expenditure.

Our updated Understanding Non-Commodity Electricity Charges guide explores these individual charges and their forecasts in greater detail.

With changes to both charging structures and forecast costs, businesses have good reason to take a closer look at how their electricity expenditure is managed. For those with significant electricity requirements, there are four areas worth considering.

As the electricity market continues to change, having a clear understanding of non-commodity charges can make a real difference to how businesses plan and manage their energy costs.

To help navigate these changes, Businesswise Solutions has updated its Understanding Non-Commodity Electricity Charges guide, bringing together the latest available data, explanations and forecasts.