top of page
Keyboard and Mouse

The Truth About Your Energy Bill: Understanding Non-Commodity Costs and Charges

NCC electric

Breaking Down the Different Types of Non-Commodity Costs in Your Energy Bill

Non-commodity costs (NCCs) are essential elements of energy bills that business consumers need to understand. As of now, NCCs account for over 60% of electricity bills and nearly 45% of gas bills. Despite fluctuations in the energy price in recent years attributed to COVID-19 related events, third-party costs have remained stable.

The rising trend of non-commodity costs is contributing to the increasing energy prices. Although the term 'non-commodity expenses' is frequently used in the energy sector, it can be hard to grasp what it means and how it affects businesses. As such, it is necessary to recognise the different types of non-commodity costs to help you better understand your energy bills and minimise charges.

This post provides a comprehensive overview of the various types of non-commodity costs in energy bills. Understanding these NCCs and their impact on your business will assist you in making informed decisions to optimize your energy consumption and lower your utility expenses.


Non-commodity costs, also known as third-party charges, are additional expenses that are not directly related to the energy a customer consumes but are necessary for delivering energy to properties and maintaining the national grid. These costs are made up of several components, including distribution costs, transmission costs, metering costs, environmental and social levies, and taxes. Non-commodity costs vary by country and region, and they are typically regulated to ensure that energy providers are not charging excessive fees to consumers. It is essential to be aware of non-commodity charges as they make up a significant portion of energy bills, especially for businesses. Understanding these costs can help consumers take steps to reduce their energy consumption and lower their overall utility expenses.

The cost of non-commodity charges has rapidly increased in recent years, with a notable change occurring between 2011 and 2022. In 2011, these costs accounted for only 36% of the overall energy cost; however, as of 2022, non-commodity charges contribute to over 70% of the total bill. This trend of rising non-commodity costs is expected to continue to increase over the next decade, with projections indicating that these charges could make up to 80% of the energy cost by 2031. The increase in non-commodity charges will significantly impact both commercial and residential consumers, making it vital to understand the various components of these costs and how to minimize them.


Transmission and distribution costs are expenses associated with the operation and maintenance of the UK's national electrical network that are incurred by energy suppliers. These costs vary among suppliers and are primarily influenced by the type of power plant.

For example, solar and wind power generators have less reliable output than gas or nuclear power plants. As the UK moves towards renewable energy, the cost of system balancing is likely to increase.

The main components of transmission and distribution costs include -

DUoS (Distribution Use of System Charges), which covers the costs of maintaining the distribution networks, cables and ensuring a stable energy supply to homes and offices.

TNUoS (Transmission Network Use of System) is a fee that customers pay to help maintain the national grid, including pylons and substations.

Finally, BSUoS (Balancing Services Use of System) covers any expenses incurred in balancing the amount of electricity flowing through the network. Generating more energy than required can be wasteful, and insufficient supply can lead to blackouts or power cuts.


These taxes are imposed to help fund various government initiatives and green energy programs.

For example, FiT (Feed-in Tariff) is a fee established to fund smaller renewable generation projects that sell energy back to the grid.

CCL (Climate Change Levy) is a tax aimed at increasing efficiency and reducing emissions that businesses pay based on their energy usage. The more energy a business uses, the higher the CCL cost.

CfD (Contracts for Difference) is another tax introduced to support low carbon energy providers and stimulate low carbon investment. It replaced the older Renewables Obligation tax in 2019.

Additionally, the Capacity Market (CM) scheme helps ensure a steady supply of energy during peak periods. The cost of this scheme depends on how much extra electricity is used over the winter period. Understanding these government levies and taxes is essential for consumers to better manage their energy consumption and expenses.

changes over the years

In recent years, there has been a trend for energy suppliers to shift some of the non-commodity costs, such as distribution and transmission costs, from the unit rate to the standing charge.

The unit rate is the cost you pay for each unit of energy you use, whereas the standing charge is a fixed daily charge to cover the supplier's fixed costs, such as meter readings and general administration.

By moving some of the non-commodity costs to the standing charge, the unit rate can be reduced, which may be attractive to consumers. However, this can also make comparing tariffs more challenging, as you need to factor in both the unit rate and the standing charge to get a clear understanding of the cost. It is essential to review different tariffs carefully to ensure you are getting the best deal to suit your energy needs and usage.


We hope this overview of non-commodity costs in energy bills has been informative and helpful.

At The Smart Energy Company, our energy experts can help you navigate the complexities of energy bills, and find the best deal for your needs. Whether you're a small business owner or a large corporation, we can provide a quote for your next energy renewal and help you save money on your energy bills. Don't hesitate to contact us today to speak with one of our energy experts and learn how Smart Energy Company can help you optimise your energy consumption and expenses. | 0151 459 3388

127 views0 comments

Recent Posts

See All


Keep Up To Date With Market Updates


Securing your next energy contract at the optimum moment is essential for fully realising your savings opportunities. Provide your details below to gain access to weekly market updates, giving you the advantage to make informed purchasing decisions at the right time.


Bid farewell to aggressive sales approaches from other brokers and take charge with confidence!

You're Subscribed! Look out for your first report soon!

Have More Questions?

  • Is it possible to change multiple business utilities at the same time?
    Our switching service allows you to switch multiple utilities simultaneously. We have successfully assisted multiple businesses in the UK by helping them save on various services such as energy and water with savings within 2023 already over the £2 Million mark.
  • How much can I save on my business utility bills?
    The amount you can save on your business utility bills will depend on various factors such as your current usage, the rates offered by different providers, and the specific deals available in your location. However, our switching service is designed to help you find the best deals and save as much as possible. By comparing multiple suppliers and negotiating competitive rates, we aim to maximise your potential savings. Get in touch with us to discuss your specific needs and get personalised information on potential cost savings for your business utility bills.
  • How does switching business utilities work?
    Switching business utilities involves a straightforward process. Here's a general overview of how it works: Evaluation: Start by assessing your current utility bills and usage patterns. This will give you an idea of your current costs and help identify areas where savings can be made. Comparison: Use a switching service like ours to compare different utility providers in your area. We provide you with quotes from multiple suppliers, allowing you to compare prices, contract terms, and services offered. Selection: Based on the comparison results, choose the utility provider that best meets your needs and budget. Consider factors such as price, customer reviews, contract terms, and any additional services or benefits offered. Contract Negotiation: Once you've chosen a new provider, our team can help negotiate the contract terms and rates on your behalf. Switching Process: The switching service will coordinate the transition with your current supplier and the new provider. This may involve submitting termination notices, arranging meter readings, and scheduling the activation of new services. Enjoy the Savings: After the switch, you'll start receiving services from your new provider, typically at the agreed-upon rates. You will notice savings on your utility bills, providing you with cost advantages for your business. Remember, the exact process may vary depending on the type of utility you are switching, but our switching service aims to simplify the process and assist you at every step.
  • Who are the cheapest business utility providers?
    As market conditions and prices fluctuate regularly, it's challenging to provide an up-to-date and definitive list of the cheapest business utility providers. The prices we provide you are valid and available on the day of the quote and will provide most current and competitive deals available. Our switching service helps you compare prices and offers from multiple suppliers, ensuring you have the most accurate and relevant information to make an informed decision about your business utility provider.
  • What is energy procurement?
    Energy procurement is the process of sourcing, negotiating, and securing energy contracts to meet the specific needs of a business. It involves analysing energy consumption patterns, understanding market trends, and negotiating with suppliers to obtain the best possible rates and contract terms.
  • Why is energy procurement important for my business?
    Energy procurement ensures that your business secures energy contracts that are both cost-effective and aligned with your operational needs. Proper energy procurement can lead to significant cost savings, budget predictability, and reduced risks associated with volatile energy markets.
  • How does The Smart Energy Company help with energy procurement?
    We specialise in analysing your energy consumption, understanding your specific needs, and leveraging our relationships with over 20 suppliers to negotiate the best possible contracts on your behalf. Our team ensures you get optimal rates, flexible terms, and contracts that align with your business goals.
  • How do you ensure I get the best energy rates?
    Our team continuously monitors the energy market, staying updated with trends, price fluctuations, and supplier offerings. Coupled with our in-depth analysis of your energy needs and consumption patterns, we negotiate with suppliers to secure rates that are both competitive and suited to your business.
  • Are there any hidden fees associated with your energy procurement services?
    Transparency is a core value at The Smart Energy Company. We provide a clear breakdown of any commission we earn as a company when you come to agree any new energy contract. This is typically included as an uplift in your unit rate and paid to us by the supplier you chose to go to. Our primary goal is to secure the best energy deals for you, with no hidden costs.
Business Meeting

Unlock the Potential of
Your Business Energy

At The Smart Energy Company, we're committed to offering tailored solutions that fit your energy needs perfectly. By staying ahead of market trends, we ensure you're always equipped with the most efficient and sustainable energy options. We take pride in our client-driven approach, where your feedback shapes our continuous improvement.


Why not schedule a complimentary consultation with one of our energy experts today? Let's find the perfect energy solution tailored to your business.

See What Our Clients Say About Us


Very helpful, quick expert advice. We have been using Smart Energy for a while.


Ian Hughes

Operation Manager

Group of Bars

bottom of page