When it comes to the monthly electric bill, most companies in the UK consider how much electricity they consume. Hiding in that bill is a multitude of third-party charges (taxes, charges, levies) that can make up a surprisingly large percentage of a company’s total energy spend. For most companies, they only focus on the unit rate, and the racks up to thousands of pounds per year in third-party costs.
Just three of the most recognized third-party charges include Transmission Network Use of System (TNUoS), Distribution Use of System (DUoS), and Climate Change Levy (CCL). These charges provide funding for important infrastructure and sustainability projects, and there are ways for businesses to take informed meaningful steps to reduce business energy bills.
In this document we will describe the charges, the meanings, the reasons and how E for Energy can help businesses reduce their costs with minimal disruption.
Commercial energy bills are made up of a couple of broad components:
While wholesale prices ebb and flow with market forces, third-party charges, which contain TNUoS, DUoS and CCL are largely out of the control of your supplier. They are applied to your bill whether you consume electricity in volumes of 10 kWh or 10 MWh. You will see them represent 40-60% of total electricity costs in the bill.
Once you understand this energy bill breakdown UK, it is the starting point to reduce cost.
TNUoS charges are the fees you pay for the use of the UK’s high voltage transmission network, the motorways of electricity delivery, transporting electricity from the generation sources (like wind farms or gas plants) to your local distribution network. How TNUoS is determined:
• Location – businesses within certain zones pay more based on their distance to generation centres
• Peak demand times – where a site is half-hourly metered, the charges are calculated based on your average demand during your three highest demand half-hour periods of winter, called Triad periods
Why this is important: if you business is using heavy equipment or running energy-intensive processes during the Triad peaks, you could be paying plenty more than you need to pay, and even small changes to your processes during the Triad peaks can drive down your TNUoS costs greatly.
Once electricity reaches the local distribution system, DUoS charges are incurred to deliver it from the substation to the premises.
The key features of DUoS are:
• Chargeable time bands Self-explanatory. Charges are greater on Red power peaks, Moderate on Amber and Lowest on Green.
• Location – DUoS is charged on a regional basis, range varies between the regions.
• Usage Take DUoS costs into account Power consumed in Red periods incurs a greater DUoS cost.
Why does it matter?
Peak DUoS costs can be approximately 20 times more than off-peak. If businesses can shift operational time frames to be within lower costs time bands, they can save significant amounts of money without cutting consumption. These savings are often achieved through DUoS cost reduction strategies.
The climate change levy UK is a tax imposed by the government to encourage commercial organisations to lessen energy usage and carbon emissions. It is charged on electricity, gas, and specific solid fuels consumed by non-domestic users.
How CCL charges UK are applied:
• Charged on every unit of energy used, regardless of type, at an annual rate set by HMRC.
• Your supplier will pass the cost to you and will show it on your bill as a separate line item unlike Environmental or Distribution charges, which is included in the rate you pay.
• Exemptions and reductions:
• If you business has a Climate Change Agreement (CCA), you can recover up to 90% of the CCL.
• In very limited amounts, energy used for specific industrial processes may be exempt.
Why this matters:
The rate of CCL per unit may seem small but for sites with significant consumption, it can become a quite large expense. If you qualify for reductions, it is effectively free money should you fail to submit to the application process. This is why understanding CCL tax explained and other energy tax for UK businesses is essential.
These costs aren’t fixed all the time – you can influence them with your operational behaviours, procurement approaches, and how your hardware is set up. With Network costs up to fund infrastructure upgrades and UK Net zero transition, avoiding these costs can only lead to increasing costs every year. For some businesses that use more energy than others, third-party charges can save you as much as, or even more than, switching to a cheaper supplier.
• Triad avoidance – use predictive alerts to signal possible peak demand times in the winter so that you can move non-essential uses away from periods of likely peak demand.
• Load management – Where possible and sensible, consider scheduling high usage activities for off-peak hours.
• Site location evaluation – For multi-site organisations, consider the zonal charges and also evaluate which zone works best for your contract strategy.
Use E for Energy: we can provide real-time triad alerts and demand analysis to help your organisation consider forward planning options, and never pay for charges that have been incurred already.
• Move activity to lower bands: Reschedule production runs or charging plans to Green band periods.
• Automate energy consumption: Allow timers or BMS to switch off Red band usage automatically.
• Review your connection agreement: Make sure you are not paying for capacity you don’t need.
E for Energy advantage: Our half hourly data analysis enables us to help you pinpoint exactly where you are paying premium DUoS costs – and how you can do something about it.
• Get a Climate Change Agreement (CCA): If you have a CCA, it can reduce your CCL bill by as much as 90%.
• Use your energy more efficiently: The more you reduce your total energy consumption, the more you will reduce your CCL bills.
• Use renewables: Some green energy supplies may be eligible for CCL exemption.
E for Energy advantage: We help you with the CCA application process, compliance, and fleet consumption to help maximize relief.
At E for Energy, we do more than negotiate a lower unit rate. We combine data-led analysis with strategic demand management and expert procurement to drive down costs that many suppliers can’t see. Our process includes:
• Full bill audits to demonstrate overcharges and excessive third-party costs
• Triad and DUoS avoidance strategies that suit your operations
• Capacity and contract optimisation so you don’t pay to much
• CCL compliance and CCA management for eligible clients
Case study snapshot:
One of our manufacturing clients reduced their annual TNUoS and DUoS charges by 28% through focused load shifting and extending their capacity agreement—saving over £40000 a year with no loss of production.
TNUoS, DUoS, and CCL may make up unavoidable parts of your energy costs, however, they can be managed and potentially reduced! There is a lot that you can do to understand how these costs impact you and, where possible, to minimise them; so that you can see big savings for your company.
At E for Energy, we have a lot of experience identifying these costs, and unlocking these hidden savings—ensuring you only pay for what you need to and not a penny more.
Are you ready to reduce business energy bills and take control of third-party costs? Get in touch with us today for a complimentary energy cost review