Your electricity bill has two halves. One you've probably noticed. The other, most suppliers would rather you didn't look at too closely.

The first half is the commodity cost: the price of the electricity itself, set by the wholesale market. The second half is everything else - a collection of charges that pay for the infrastructure, policies, and government programmes that sit on top of every unit of power you use. These are Non-Commodity Costs, or NCCs.

For many UK businesses, NCCs make up somewhere between 40% and 60% of the total electricity bill. That's not a typo. For every £1 you spend on electricity, you may be spending more on the system around the electricity than on the electricity itself.

Here's what they are, why they exist, and what you can or cannot do about it.

What NCCs are paying for

NCCs aren't a single charge - they're a bundle of separate levies, each with its own purpose and its own set of rules. They fall into a few broad categories.

Network charges cover the physical infrastructure that gets electricity from where it's generated to where you use it. The two main ones are TNUoS (Transmission Network Use of System) and DUoS (Distribution Use of System). National Grid charges TNUoS to pay for the high-voltage national transmission network - the pylons and cables that carry power across the country. Your regional Distribution Network Operator charges DUoS for the local network that delivers electricity to your street and building. Both charges vary depending on where you are in the country and, crucially, when you use power. Businesses that draw heavily during peak demand periods pay more.

Balancing charges (BSUoS, or Balancing Services Use of System) pay for National Grid's work keeping supply and demand in real-time balance. Whenever the grid needs to call on an emergency generator or ask a wind farm to curtail output to prevent overloading the system, those costs get spread across all consumers through BSUoS. The charge fluctuates settlement period by settlement period and has historically been difficult to predict. [Note: Ofgem proposed removing BSUoS from consumer bills and collecting it from generators instead — verify current status of this reform before publishing.]

Policy levies fund the UK's renewable energy transition. The Renewables Obligation (RO) and Contracts for Difference (CfD) scheme both create payments to renewable generators - the RO through a certificate trading mechanism, CfD through a government-backed top-up payment. The Feed-in Tariff (FiT) does the same for smaller-scale generation. Every business that buys electricity from the grid is effectively funding these schemes through their bills, regardless of whether their contracted supply is renewable or not.

Capacity Market charges pay for the standby generation capacity that keeps the lights on when renewable output is low or demand spikes. The Capacity Market auctions off contracts to power plants - including gas peakers - to be available when called upon. Those contract costs flow back onto business electricity bills.

The Climate Change Levy (CCL) is a straightforward government tax on energy used by businesses. It exists to give businesses a financial incentive to use less energy and to fund broader environmental programmes. Businesses with strong energy efficiency credentials or those using certified renewable electricity can access a reduced rate through Climate Change Agreements or Levy Exemption Certificates.

Why NCCs have grown so much

When the UK's electricity market was privatised in the 1990s, NCCs were a relatively small fraction of bills. The commodity price dominated. Over the past twenty-five years, that balance has shifted, for two main reasons.

First, the UK has invested heavily in renewing and expanding its grid infrastructure and in building out renewable generation capacity. That investment is real and the grid is genuinely cleaner as a result - but the costs of it land on business electricity bills, year after year, whether or not you signed a renewable contract.

Second, the policy framework has layered charge upon charge without ever simplifying or consolidating what came before. Each new scheme added its own levy structure. The result is a bill that most finance directors find genuinely opaque, even with the help of a specialist.

The system was not designed to be easy to understand. That's worth naming plainly.

What you can and can't do about them

This is where honesty matters, because there are two types of claims in the market and they are not the same thing.

What you cannot avoid: If you buy electricity from the grid in the UK, most NCCs apply to you. They are statutory levies and network charges - they are not supplier margins or optional fees. TNUoS, DUoS, CCL, the policy levies - these apply to virtually every business energy customer. No supplier, broker, or consultant can make them disappear entirely.

What you can reduce: A handful of routes exist to reduce some NCC exposure for some customers.

DUoS time-of-use tariffs are another. Distribution charges are cheaper at off-peak times. Shifting flexible demand - EV charging, refrigeration cycling, heating pre-heating - away from peak periods brings down this portion of the bill.

CCL exemptions apply to some businesses. Those in energy-intensive industries that sign a Climate Change Agreement with the government can access a reduced CCL rate in exchange for meeting energy efficiency targets. Businesses purchasing certified renewable electricity and holding the relevant Levy Exemption Certificates can also pay a lower rate.

Exempt Supply under P442 removes a defined portion of NCCs from matched renewable generation volumes - specifically for businesses that are properly set up under the scheme. It doesn't remove all NCCs, but it does remove some of the most significant policy levies from the matched portion of your consumption. You can read more about how that works in our P442 explainer for business customers.

What to be cautious of: Any offer that claims to remove all NCCs, or that can't show you clearly which charges are being reduced and by how much, deserves scrutiny. The savings from genuine NCC reduction schemes are real but they're specific and bounded. A worked example showing which line items change and by what £/MWh figure is not too much to ask for.

The deeper problem

NCCs are a symptom of something structural. The way the UK electricity system distributes cost means that businesses - particularly those without the resources to employ specialist energy consultants - absorb risk and expense that the system's designers never had to think about. The people who designed the Capacity Market didn't pay Capacity Market charges. The people who built the transmission network recovery mechanism didn't face TNUoS bills.

That gap - between who designs the system and who pays for it - is why around 87% of businesses in a recent survey said the energy system needs to change, and 84% said they don't believe there's a credible government plan to fix it.

Understanding which charges you're paying, why, and where there is genuine room to reduce them is not just a procurement task. It's the starting point for any serious conversation about what your energy bill should actually cost - and what it would look like if the system were designed for the people who pay for it.

For more on how NCCs interact with renewable energy schemes, see our P442 for Partners and Business Customers explainer. For context on why wholesale prices behave the way they do, see Why do gas price spikes still push up the price of electricity?