What are non-commodity costs?

Non-commodity costs make up a large proportion of a typical business energy bill, these costs fall into three categories:

Renewable subsidies:

Over the last decade, renewables have been heavily supported by government subsidy schemes, such as the Renewable Obligation (RO), Feed-in Tariff (FiT) and Contracts for Difference (CFD) schemes.

Although the RO and FiT scheme have now closed, the costs associated with those generation projects still appear on consumer bills. These costs are generally impacted by inflation, load factors and national demand.

Depending on your business risk appetite, you might want to fix these renewable subsidy costs or pass-through with a reconciliation.

Use of system costs:

The costs to use the energy system, including; TNUoS - the cost for using the transmission network; DUoS - for using your local distribution network; and BSUoS –for the grid to balance demand and supply at all times.

With increased intermittency on the grid these balancing costs are becoming even more unpredictable. Many businesses benefit from managing their business operations around peak times to see savings on these costs.

To benefit from triad management, respond to system stress events, load balancing or peak shaving, you would need these costs to be passed-through.

Taxes and other support levies:

The Climate Change Levy (CCL), Capacity Market, VAT and any other taxes or third-party costs. These costs apply to all customers and are added to all invoices.

If you plan to shift your consumption out of the Capacity Market applicable hours, ensure that you pass-through these costs for maximum savings.

Want to learn more?

You can find out more about non-commodity costs by registering for our next webinar where our pricing experts will be providing their forecasts and analysis to inform your business energy strategy.