Untangling non-commodity costs: What could Industrial Strategy announcements mean for your energy billing? 

On 23 June the Department for Business and Trade published the much-anticipated plan to promote business investment and growth in the UK over the next decade. 

Although energy intensive businesses took centre stage within the Industrial Strategy, the impacts of these announcements are multifaceted: funding them could be reflected in the non-commodity element of non-domestic electricity bills. 

Therefore, now is the right time to look at your non-commodity costs and how you can mitigate the impact of their potential rise to your portfolio. 

What are non-commodity costs?

Your electricity bill is made up of two elements:    

• The commodity cost. This is the wholesale cost of the electricity you use – set by market conditions.   
• Non-commodity costs, also known as third party or non-energy costs. Examples of non-commodity costs include Transmission Network Use of System (TNUoS) charges, Distribution Use of System (DUoS) charges and Climate Change Levy (CCL). 

In a nutshell, non-commodity costs are the charges beyond the cost of the energy itself. They cover the costs of delivering energy, maintaining the grid and any government taxes and levies. 

Why are we talking about this?

One of the key takeaways of the Industrial Strategy was an uplift to the Network Charging Compensation (NCC) scheme – which offers energy intensive industries compensation on network charging costs for using the electricity grid – from 60% to 90% from 2026. 

The reimbursement through the NCC has been funded by a levy on all licensed electricity suppliers in Great Britain, known as the EII Support Levy. In turn, this levy is transferred to non-domestic consumers as an extra charge on their electricity bills. 

While details regarding the uplift have not been confirmed and each supplier has their own recovery methodologies, we can expect this uplift to be reflected in the EII Support Levy. 

What does this mean for me?

Although further details regarding the Industrial Strategy announcements are to be confirmed, future non-commodity cost increases could have a significant impact on your billing. 

Now is the time to examine your consumption and costs comprehensively to ensure you can approach any changes from an informed footing. 

Let’s look at your non-commodities

Wholesale electricity prices (the commodity) tend to be the headline act when energy costs are discussed. Meanwhile, non-commodity costs are fragmented, made up of complex industry information and interlinked with numerous initiatives. 

Nevertheless, non-commodity costs can currently make up around 60% of business energy bills. An expert energy partner can help you untangle non-commodity costs and help you understand and mitigate their impact on your portfolio. 

Inspired’s Forensic Energy Cost Audit scrutinises all your non-commodity costs. Our experts analyse your present and past non-commodity costs for past errors of up to six years prior, and you could also benefit from ongoing savings. This service operates on a share of savings basis, so if we find nothing – there is no fee. 

Besides our Audit, Inspired offers comprehensive support on mitigating the impacts of rising non-commodity rates on your billing.  

Our experts continuously review any changes to specific charges and their changing rates. We also offer tools that can bolster your knowledge with an estimated forecast. 

Being more energy efficient pays off

The solutions at your disposal do not end there. Improving your energy efficiency is one of the most impactful ways to control increasing costs. 

For example, Circuit-Level Monitoring offers visibility of your consumption and carbon emissions in far greater detail than what is available from a billed meter – allowing you to pinpoint wastage effectively. 

Meanwhile, onsite generation makes you less dependent on the energy grid and renewables projects can make a big reduction in your carbon footprint.  

Inspired is an end-to-end solution provider – we cover both the technology installation as well as managing the changes to your supply contracts, bills and grid connections.