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When you look at a business electricity bill, it is easy to assume the whole thing is the cost of the energy plus the supplier profit. In reality it is neither, for the most part. A large share is made up of non-commodity costs, the network and policy charges every supplier has to pass on. This guide explains what they are, why they matter, and what it means for comparing deals.
In short. Non-commodity costs are the parts of your electricity bill that pay for delivering the power and funding government energy policy, rather than the energy itself. They typically make up more than half the bill, they are broadly the same whichever supplier you use, and they are not negotiable. Knowing this changes how you compare, because the genuine difference between suppliers is smaller than the headline suggests.
The wholesale energy, the actual electricity, is only one part of your bill. Everything else that is not supplier profit falls under non-commodity costs, sometimes called third party costs. They split into two broad groups: the cost of the networks that deliver the power, and the cost of government energy and social policies funded through bills.
These charges are set by the regulator and the networks, not by your supplier. Your supplier collects them and passes them on, which is why they appear, often bundled into your unit rate rather than listed separately, on every business electricity bill in the country.
Distribution charges, known as DUoS. The cost of the local networks that carry electricity from the grid to your premises. They vary by region and by the time of day power is used.
Transmission charges, known as TNUoS. The cost of the high voltage national grid that moves power around the country.
Balancing charges, known as BSUoS. The cost of keeping supply and demand matched second by second across the grid.
Together these pay for the physical delivery of your electricity, and they are a large, unavoidable part of the bill.
The second group funds government energy and environmental policy through bills rather than general taxation.
Renewables Obligation and Contracts for Difference. Support the build out of renewable generation.
Feed-in Tariff. Funds payments to smaller renewable generators.
Capacity Market. Pays to keep enough generation available to avoid shortfalls at peak times.
Add the Climate Change Levy, a per unit tax on business energy, and you have the bulk of the non-commodity costs on a typical bill.
The key insight is that no supplier can undercut the network and policy costs, because every supplier pays the same ones and simply passes them on.
✓ The wholesale energy and the supplier margin are the only parts a supplier can really compete on.
✓ Non-commodity costs are broadly the same across suppliers for the same site.
✓ Understanding this stops you being taken in by a headline rate that looks too good.
✗ Believing a supplier who claims to slash costs that are fixed by the regulator and networks.
✗ Comparing on the unit rate alone, when much of it is pass through cost outside anyone's control.
Some suppliers bundle all non-commodity costs into a single all inclusive unit rate, which is simple but hides the split. Others, particularly for larger half hourly sites, itemise them as separate pass through charges, which is more transparent but harder to read. Neither is wrong, but knowing which you are looking at helps you compare like for like, because an all inclusive rate and a pass through rate are not directly comparable at face value.
On a typical business electricity bill, the wholesale energy might be only around a third to 40 percent of the total. The rest, more than half, is non-commodity costs and supplier margin. That means if one supplier quotes a unit rate a fraction below another, the saving is coming out of the small slice they actually control, not the large slice that is fixed. It is why genuine quotes tend to cluster within a range, and why a dramatically cheaper offer deserves a careful look at what has been left out.
The lesson is not that comparing is pointless, it is the opposite. Because so much of the bill is fixed, the supplier margin and how well they buy wholesale energy are exactly where a good deal is won or lost. Compare on the full cost, ignore any claim to cut fixed charges, and focus on the parts that can genuinely move.
Know the split. Remember most of your bill is delivery and policy cost, not energy, so treat wild claims of savings with suspicion.
Check how costs are presented. Find out whether your rate is all inclusive or has separate pass through charges, so you compare quotes on the same basis.
Compare on total cost. Judge deals on the full annual cost for your usage, not the headline unit rate.
Focus on the movable parts. The real competition is on margin and wholesale buying, so that is where to look for a better deal.
The parts of your electricity bill that pay for delivering power through the networks and for government energy policy, rather than the energy itself. They typically make up more than half the bill.
No. They are set by the regulator and the networks and passed on by every supplier. Any claim to cut them is really cutting supplier margin, which is the only movable part.
Because delivering the power and funding energy policy cost more than the electricity itself. Network and policy charges together usually outweigh the wholesale energy cost.
They are broadly similar for the same site, though network charges vary by region and larger sites pay more detailed charges. Between suppliers they are essentially the same.
Focus on the parts a supplier can actually influence, their margin and wholesale buying, compare on total annual cost, and disregard any promise to cut charges that are fixed.