Beyond the unit rate: Understanding, managing and mitigating the rise of non-wholesale energy costs.

Part two – Behind the bill: Understanding the components of non-wholesale energy costs.

In part one, we explored how the energy market is entering a new phase: one where long-term structural transformation, not short-term price volatility, will define the cost of doing business. In this second part, we go deeper – behind the bill – to uncover what’s really driving this new era of non-wholesale costs, how they work, and what they mean for organisations across the UK.

Beyond the unit price.

When most organisations think about their energy costs, they still think in terms of pence per kilowatt hour, the unit rate that rises or falls with market prices. But that figure tells only half the story.

Over the past decade, a growing share of the typical energy bill has been made up of regulated, non-wholesale charges. These costs have little to do with market trading and everything to do with maintaining, upgrading, and decarbonising the UK’s energy system. Non-wholesale costs now represent more than 50% of the total electricity bill for many organisations and are forecast to continue rising as investment ramps up to meet Net Zero goals.

What are non-wholesale costs?

Put simply, non-wholesale (or non-commodity) costs are the price we all pay to keep the energy system working, and to prepare it for the future.

They include:

• Transmission Network Use of System (TNUoS) – the cost of maintaining and expanding the high-voltage transmission network that moves power from generators to local networks.
• Distribution Use of System (DUoS) – the cost of delivering electricity through regional networks to end users.
• Balancing Services Use of System (BSUoS) – the cost of keeping supply and demand in real-time balance across the grid.
• Capacity Market Levy – funding to ensure there’s sufficient backup generation available during peak periods or supply shortages.
• Renewables Obligation (RO) and Contracts for Difference (CfD) – charges that support renewable energy generation and protect developers from price uncertainty.
• New Nuclear RAB (Regulated Asset Base) Charge – a new cost recovery mechanism to fund the construction of nuclear plants such as Sizewell C, ensuring stable investor returns during build phases.

Together, these costs form the backbone of a reliable, decarbonised energy system. But they also represent a structural change in how energy is funded, moving from a market-based to an infrastructure-based cost model.

The price of progress.

To understand why these costs are rising, it helps to look at what they fund. Each one supports a different part of the UK’s transition to a low-carbon, resilient energy system.

• TNUoS and DUoS charges reflect the investment needed to upgrade ageing grid infrastructure, connect new renewable generation, and expand capacity for electrification.
• BSUoS covers the increasing complexity of balancing a grid supplied by intermittent renewables and distributed generation.
• Capacity Market costs ensure security of supply; a safety net that prevents blackouts during periods of high demand or low renewable output.
• Renewables Obligation and CfD schemes underpin the UK’s clean energy transition by providing long-term price stability for renewable projects.
• The new Nuclear RAB model ensures major low-carbon generation projects can be financed without excessive upfront cost to taxpayers or investors. Essentially pay something now or pay (potentially much) more later.

In short, these are not arbitrary surcharges; they are the mechanism through which the UK funds its energy future. The challenge for organisations is that, unlike wholesale costs, these charges are regulated and unavoidable, meaning no procurement strategy or market timing can make them disappear.

What’s changing next.

The next few years will see a further escalation in these non-wholesale charges as new mechanisms come online, and existing ones are rebalanced.

Key changes include:

• October 2025: introduction of the Sizewell C Regulated Asset Base operational levy (0.028 p/kWh) and interim rate (0.354 p/kWh).
• April 2026: Transmission (TNUoS) standing charges are set to almost double, while balancing (BSUoS) costs are projected to rise by 46%.
• Capacity Market Levy: forecast to increase by up to 100% to maintain grid resilience as more variable generation enters the system.

These changes reflect the UK’s growing need to secure long-term energy independence and decarbonisation progress, but they will also add measurable pressure to organisational budgets.

The practical challenge.

Understanding where these costs come from is one thing, but the next step is being clear on how they are applied. Energy bills are often complex, and the language and acronyms of regulation can be difficult to decipher.

In practice, many non-wholesale costs are linked to how and when your organisation uses energy. Total consumption, usage patterns, and peak demand periods all play a role in what you’re charged. This structure is deliberate; it’s designed to encourage more efficient energy use, especially during high-demand hours when the system is under strain.

That said, not every non-wholesale charge is tied to usage. Some are fixed standing costs that apply regardless of how much energy is consumed, meaning they can’t be reduced through efficiency measures alone. Even so, cutting or shifting consumption remains the most effective way to limit overall exposure, helping to reduce the total cost burden and build long-term resilience.

That’s why clarity matters; a clear line of sight into how these charges are calculated, what they fund, and how they’ll evolve. It’s the only way to make informed decisions about risk, budgets, and investment priorities.

Organisations on pass-through contracts will see these costs itemised, with charges that fluctuate in line with actual usage. Those on fully fixed-price contracts, meanwhile, will have them wrapped into a single, predictable unit rate, offering simplicity, but perhaps at the expense of transparency into what’s really driving cost.

The fundamental reality is this: you can’t avoid regulated charges, but you can manage their impact.

Part three – how to manage and mitigate rising non-wholesale energy costs.

In part three, we’ll explore how organisations can mitigate and manage rising non-wholesale costs, how to move from passive exposure to active management, and how Equity Energies and the wider DCC Energy group are helping organisations take control of their energy future.

By Luke Booth, Director of Strategic Client Experience.