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Non-commodity costs

What are non-commodity costs?

Your energy unit rate is made up of two parts: commodity and non-commodity costs. Commodity costs are the electricity or gas you use. Non-commodity costs cover network charges and government levies.

Electricity

Click on the non-commodity costs below to learn more:
The Renewables Obligation (RO) charge helps fund UK renewable energy projects. It encourages energy companies and investors to develop more wind, solar, and other renewable power, helping the UK generate cleaner electricity and reduce reliance on fossil fuels.
Elexon manages the Balancing and Settlement Code (BSC), which makes sure everyone in the UK electricity market is paid correctly. They check how much electricity generators planned to produce and how much suppliers expected to use, compare it with the actual usage, and then make sure any differences are settled accurately.
The BSUoS charge helps National Grid cover the cost of keeping the electricity system balanced, making sure supply meets demand. It’s calculated every half hour based on how much electricity is added to or taken from the grid, with rates set every six months.

The AAEHDC scheme helps reduce electricity distribution costs in certain remote areas of the UK – currently, this applies to the North of Scotland.

How it works:

  • National Grid collects an assistance amount and passes it to the local distributor (Scottish Hydro Electric Power Distribution Ltd.) to help lower distribution charges for customers.
  • National Grid also keeps a small administration allowance to cover the cost of running the scheme.

This means customers in the area benefit from lower electricity distribution costs thanks to the scheme.

The Feed-In Tariff (FiT) charge supports a government scheme that encourages small-scale renewable energy projects, like solar and wind. Participants receive payments for the electricity they generate and feed into the grid. The scheme ran from 2010 to 2019, but participants who joined during that time continue to receive payments.
The CfD charge supports the government’s scheme that encourages low-carbon energy projects by guaranteeing a set price for the electricity they generate. If wholesale prices fall, generators are subsidised, and if prices rise, any surplus is returned to the scheme. These costs and benefits are reflected in your bill.

The EII Support Levy is a charge on electricity bills that helps fund the Network Charging Compensation (NCC) Scheme, part of the government’s British Industry Supercharger initiative.

The scheme supports industries that use a lot of energy and face strong international competition – for example, steel, chemicals, and paper. These businesses, called Energy Intensive Industries (EIIs), get a 60% discount on certain network charges (Distribution, Transmission, and Balancing Service charges).

The scheme is administered by Elexon, and the cost is recovered through a levy on non-EII customers’ energy supply. It started in April 2024, with payments to EIIs made monthly and 13 months in arrears, and the levy for non-EII customers also began at the same time.

The TNUoS charge helps pay for the electricity transmission network, also called the National Grid. It covers the cost of maintaining the cables, pylons, transformers, and other infrastructure that carry electricity at high voltage from electricity generators to local distribution networks. Both generators and businesses contribute to this charge.
Sometimes the amount paid by Elexon to generators and suppliers doesn’t exactly match the amount received – this is called an imbalance, which can be positive or negative. To make sure Elexon doesn’t profit from these differences, the Residual Cashflow Reallocation Cashflow (RCRC) gives suppliers and generators a small adjustment, so the total imbalance evens out to zero.

The Renewable Energy Guarantees of Origin (REGO) scheme, run by Ofgem, helps you see how much of the electricity you use comes from renewable sources.

How it works:

  • Renewable generators earn one REGO certificate for each MWh of renewable electricity they produce.
  • When suppliers buy renewable electricity, they also get these certificates.
  • At the end of the year, suppliers submit their REGOs to Ofgem.
  • Ofgem records the total in the Renewable and CHP register, showing how much renewable electricity each supplier has provided.

This system supports Fuel Mix Disclosure (FMD), which means suppliers must tell customers the mix of fuels – coal, gas, nuclear, renewable, and others – used to generate the electricity they supply.

The Climate Change Levy (CCL) is a government tax on energy used by businesses in the UK. It encourages companies to use energy more efficiently and reduce carbon emissions. The tax rate is updated every year on 1st April.
The DUoS (Distribution Use of System) charge helps pay for the local electricity network that delivers power to your business, including cables, poles, transformers, and substations. There are six operators across the UK, and each sets its own regional charges within limits set by Ofgem. The charge depends on how much electricity your business uses and can vary at different times of day to encourage using electricity outside peak periods.
The Capacity Market (CM) charge helps keep electricity flowing when it’s needed most. It pays generators to supply energy and rewards large users who reduce consumption during peak times. This flexible approach helps avoid blackouts and supports the UK’s transition to more low-carbon energy.

Gas

Click on the non-commodity costs below to learn more:
The Local Distribution Zone (LDZ) System Capacity Charge helps pay for transporting gas through your local network to homes and businesses. The cost depends on the capacity needed to deliver gas in your area and is part of what suppliers pay to the network operators for using their infrastructure.
The LDZ Exit Capacity NTS Charge covers the cost of moving gas from the national grid into your local area. Suppliers pay this fee to ensure gas can flow from the National Transmission System into the local distribution network and reach homes and businesses.
The Unidentified Gas (UIG) Charge recovers revenue that is lost through gas being stolen, lost or consumed by unregistered meter points.

The LDZ Customer Charge helps cover the cost of running and maintaining the local gas network, including infrastructure and administration. Unlike capacity charges, which depend on how much gas you use or the capacity needed, the customer charge is usually a flat fee – though the exact calculation depends on the size or type of consumer:

  • Less than 73,200 kWh/year: The charge is based on capacity.
  • 73,200–731,999 kWh/year: The charge includes a fixed fee (depending on meter reading frequency) plus a capacity-based element based on the registered supply point capacity (SOQ).
  • 732,000 kWh/year or more: The charge is calculated based on the registered supply point capacity (SOQ).
The DN Entry Commodity Charge covers the cost of gas entering the local distribution network from the national transmission system. Suppliers pay this fee based on the amount of gas entering the network, rather than the network capacity.

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