Most energy conversations start and end at the unit rate. You have a forwarding contract, you watch the market, and you wait for wholesale costs to fall. But for most UK businesses, electricity bill savings are hiding somewhere you may never have looked: buried inside the charges that sit beneath the rate you negotiated.
Non-energy costs now make up between 60% and 65% of a typical UK business electricity bill. That means the wholesale price of power, the thing most people spend their energy management time on, is less than half the story. The rest is a collection of network charges, policy levies and capacity fees that change every year, in most cases upwards and that most end users never see itemised clearly.
This article breaks down what those charges actually are, which ones are growing fastest and where the real levers are for reducing your exposure.
Pull up an average business electricity bill and you'll see unit rates, a standing charge, and capacity charge. What you won't see clearly is the stack of components that make up those numbers.
Your bill is built from two broad categories. The first is commodity costs: the wholesale price of electricity itself. The second is non-commodity costs: everything else. That ‘everything else’ includes:
Each of these is calculated separately, updated regularly and passed through to your bill. How visibly depends on your contract type.
The headline risk in your energy budget right now is not the wholesale market. It's transmission.
From April 2026, TNUoS charges increased by 64% year-on-year, jumping from around £15.70/MWh to £25.70/MWh on average. TNUoS revenues across the network rose from £3.97bn in 2025/26 to £6.38bn. That increase is driven by the investment required to upgrade transmission infrastructure to connect remote offshore wind to the grid, costs confirmed under Ofgem's RIIO-3 price control.
And 2027 is likely to bring further pressure. DUoS charges, which were relatively stable in 2026, are forecast to increase sharply. Standing charges for some sites are projected to rise between 65% and 77% from April 2027. Maximum Import Capacity charges will rise further. The Climate Change Levy is also stepping up: from 0.775p/kWh to 0.801p/kWh in April 2026, and then to 0.827p/kWh in April 2027.
These are not one-off corrections. They reflect a structural shift in how the UK energy system is being funded. Businesses that treat non-energy costs as background noise will find that noise getting significantly louder.
Your agreed supply capacity (measured in kVA) is the amount of electrical capacity your site is contracted to have available at any moment. Your network operator charges you for that capacity whether you use it or not.
The problem is that many businesses set their kVA level years ago, based on a worst-case demand scenario that never actually materialised and have never revisited it since. Paying for capacity you don't use is one of the most straightforward and correctable sources of overspend in UK energy billing.
To provide an example: a site with agreed capacity of 195 kVA where measured peak demand across a full year never exceeded 87 kVA. A 100 kVA reduction in agreed capacity can typically save between £1,200 and £2,400 per year, depending on your DNO region and tariff.
When Ofgem introduced the Targeted Charging Review (TCR), the goal was a fairer distribution of fixed network costs. In practice, it created a banding system that determines how much each site pays in residual charges and which many end users have never checked.
TCR applies to both transmission and distribution residual costs. For non-half-hourly (NHH) meters, your band is determined by annual consumption. For half-hourly (HH) meters, it is based on your authorised supply capacity. Your Distribution Network Operator assigns the band and it has a direct, fixed impact on the standing charge element of your bill.
The issue is that bands can be wrong. Sites that have reduced consumption, changed operations, or altered their supply arrangements may be sitting in a band that no longer reflects their actual position. Getting it corrected will not happen automatically. It requires someone to spot the discrepancy, verify the data, and raise it with the DNO.
If you have not reviewed your TCR band assignment in the last 12 months, it is worth doing now.
For certain industries, a meaningful share of electricity bill costs are not just reducible. They are avoidable entirely, through government exemption schemes that many qualifying businesses either do not know about or have not fully applied for.
Businesses where electricity costs represent at least 20% of Gross Value Added can apply for EII certification. Eligible companies can claim up to 100% exemption on Contracts for Difference, Renewables Obligation and Feed-in Tariff charges. These three levies alone represent a significant share of non-commodity costs and removing them from your bill is not a discount or a negotiated rate. It is an entitlement.
Businesses holding an EII certificate can also access the British Industry Supercharger, which provides compensation for network charge costs. From April 2026, eligible businesses can receive compensation for up to 90% of their network charge exposure. Around 370 businesses currently hold this designation. If your business qualifies and is not on the scheme, you are effectively funding other companies' discounts without receiving your own.
BICS is the most significant new support mechanism for manufacturing businesses in a generation. Announced as part of the government's Modern Industrial Strategy in June 2025 and finalised in April 2026, it is designed to reduce electricity costs for eligible UK manufacturers by exempting them from the indirect costs of the Renewables Obligation, Feed-in Tariffs and the Capacity Market. The government estimates the combined relief is worth around £35 to £40 per MWh, with potential bill reductions of up to 25% for qualifying businesses.
The scheme covers over 10,000 businesses across sectors including automotive, aerospace, steel, pharmaceuticals, and manufacturers that supply those industries. Both SMEs and large businesses can qualify, based on the nature of the activity at each site rather than company size. Eligibility is tiered by the proportion of electricity used in qualifying production: sites where 50% or more of electricity supports eligible manufacturing receive a full 100% exemption; sites between 25% and 50% receive a 50% exemption; and sites below 25% receive nothing.
BICS takes effect from April 2027, with a one-off backdated payment also due in 2027 to cover the support businesses would have received from April 2026. Legislation is expected in Autumn 2026.
If your business is in a qualifying manufacturing sector and you have not yet assessed your BICS eligibility, now is the time to do it. The businesses that engage early, gather their meter data and map their eligible production processes will be best placed to claim their full entitlement from day one.
Businesses in 54 eligible industrial sectors can enter into a Climate Change Agreement, committing to energy reduction targets in exchange for a discount on the Climate Change Levy. The discount for 2026/27 sits at 92% for electricity and 89% for gas. For businesses paying significant CCL volumes, the financial impact is material.
If your business operates in manufacturing, chemicals, food processing, ceramics, paper, glass or any other energy-intensive sector, establishing whether you qualify for one or more of these schemes is a high-priority task. The application processes have deadlines and require documentation, but the potential savings justify the effort.
Wholesale energy costs dominate the conversation. They're the most visible line on the bill, and when markets spike, they're the first thing everyone points at. But visible doesn't mean controllable.
The charges where you have real leverage sit further down the invoice. Capacity charges can be reduced by right-sizing your kVA. TCR bands can be corrected if you've been wrongly assigned. Exemption scheme entitlements can be claimed if they haven't been already. And on pass-through contracts, network charges can be actively managed through load shifting and time-of-use flexibility.
Where you have less room to move: the broad policy levies, TNUoS and DUoS tariff rates, and CCL rates set by Ofgem and HMRC. Your procurement strategy shapes how those costs reach you, but it doesn't change the rates themselves.
Here's the practical takeaway: if your energy focus is almost entirely on the unit rate, you're spending the majority of your time on roughly a third of your bill. The other two-thirds deserves the same rigour and the same strategic attention.
That's where True Group work. We look at the whole bill, not just the headline number. Book a call with us to see how we can help you.