Energy cost optimisation. How to cut non-commodity charges on your business energy bills

Non‑commodity charges make up a large part of your business electricity bills, often 50% to 60% or more of total costs. Switching to a fixed contract with a lower unit rate should help to lower your bills, but this may not affect the non-commodity costs unless they’re also fixed (some suppliers include these as a variable cost).  

The good news is you can reduce these costs through smarter capacity, network and billing decisions. 

This guide walks you through practical steps to optimise the non‑commodity part of your bill, to help you keep some control as charges rise over the coming years. 

Five-point summary on energy optimisation 

1. Non‑commodity charges (network, policy, balancing, and metering costs) already make up a large part of a typical UK business energy bill, so optimising these is just as important as getting a good unit rate. 
2. Reviewing your agreed capacity (kVA) using at least 12 months of half-hourly data can cut unnecessary fixed charges, especially where capacity has been set on historic peaks. 
3. Checking your TCR band, meter profile and site details, and correcting any errors with your supplier or DNO, helps ensure you are not overpaying fixed network charges after Ofgem’s Targeted Charging Review. 
4. Practical on‑site actions like shifting load away from 4 pm to 7 pm peaks, improving power factor, and using voltage optimisation where appropriate can all reduce kVA‑based and per‑kWh non‑commodity costs. 
5. Strong governance – including regular capacity reviews, annual TCR and tariff validation, monthly bill checks, and making full use of CCL, CCA and charity reliefs – turns non‑commodity charges into a controlled, optimised cost line. 

What are non‑commodity energy costs?

Your business electricity bill is split into two main parts: the commodity cost (the power you use) and the non‑commodity cost (everything else needed to get that power to your site). 

For many businesses, non‑commodity charges already account for around 60% of the electricity bill and roughly 40% of the gas bill, and this share is expected to grow further towards 80% over the next decade. 

Non‑commodity costs typically include: 

• Network charges - DUoS and TNUoS for use of the distribution and transmission systems. 
• Balancing and system costs - Charges such as BSUoS that keep the grid stable. 
• Policy and environmental levies - RO, FiT, CfD, Capacity Market, CCL and the Nuclear RAB scheme. 
• Metering and data - metering, data collection and aggregation, and sometimes third-party management fees. 

As Ofgem’s Targeted Charging Review (TCR) reshapes how residual network charges are recovered by moving more costs into fixed standing charges linked to capacity and site banding. It’s potentially more important than ever to check that your site details are correct and optimised. 

Optimising your agreed capacity (kVA) 

Your agreed supply capacity (kVA) is the maximum electrical load your site is allowed to draw from the grid, and you pay for this capacity whether you use it or not.  

It's important to check that this information is up to date and not set on historic peaks that no longer apply. This is especially important if you’ve never revisited capacity after changing equipment or operating patterns. 

A simple capacity review looks like this: 

1. Collect at least 12 months of half‑hourly demand data from your supplier or data collector. 
2. Identify your true peak demand, typical operating demand and any seasonal variations. 

• Compare your highest peak with your contracted kVA and add a safe headroom (often around 10%) to allow for growth and abnormal days. 

If your contracted capacity is significantly higher than this safe level, you may be able to reduce it and cut both capacity and network‑related non‑commodity charges.  

At the same time, demand‑side measures such as staggering start‑up times for heavy equipment, avoiding simultaneous use of large loads, and setting internal peak targets can keep your maximum demand under control. 

Getting your TCR band and site data right 

Under Ofgem’s Targeted Charging Review, businesses are grouped into TCR bands based largely on capacity and connection details, and these bands drive a big chunk of fixed network charges.  

If your band, profile class or voltage level is wrong, you could be paying more than you should. 

A basic TCR and site data health check should cover: 

• Your current TCR band and how it is applied to your business energy bill
• Meter profile class (for example, half‑hourly meter vs non‑half‑hourly meter) 
• Connection voltage level and whether it matches your actual supply
• Recent operational changes, such as new production lines, longer hours, or partial site closures

If anything looks out of line with your actual usage and site type, you can ask for it to be checked again or reclassified. You can also correct incorrect data with your DNO or supplier.  

In some cases, making sure your agreed capacity is correct can also move you into a more appropriate TCR band and reduce fixed network charges over time. 

Practical ways to cut non‑commodity costs 

You cannot remove non‑commodity charges altogether, but you can reduce how much you pay and how exposed you are as they rise. Consider the following: 

Shift load away from peak times 

Network charges such as DUoS are often higher during late afternoon and early evening on weekdays, usually around 4 pm to 7 pm. By moving flexible loads out of these windows, you reduce your peak demand, cut certain time‑banded charges and build resilience against future increases. 

Examples include: 

• Running energy‑intensive processes overnight or earlier in the day, if safe to do so. 
• Charging EVs, forklifts or battery systems during off‑peak periods. 
• Pre‑heating or pre‑cooling buildings before peak windows so systems work less hard later. 

Even relatively small changes, like avoiding all heavy equipment starting at 8 am or 4 pm, can make a measurable difference to your non‑commodity spend over a year. For more information, check out our guide to time-of-use tariffs.

Improve your power factor 

A poor power factor means you draw more apparent power (kVA) than you really need. This pushes up capacity‑related non‑commodity charges and can lead to penalties.  

Many sites can benefit from power factor correction equipment that uses capacitors to reduce reactive power and improve efficiency towards a target of at least 0.95. 

If your bills show power factor penalties or your metering data reveals consistently low power factor, talk to an engineer or energy specialist about specifying and installing correction equipment.  

In many cases, the payback comes from lower kVA‑based charges and improved performance of motors and other inductive loads. 

Use voltage optimisation where appropriate 

Some sites receive a higher voltage than their equipment needs, which can lead to wasted energy, excess heat and short component life. 

Voltage optimisation technology reduces and stabilises the voltage to the ideal level. This lowers consumption and cuts the non‑commodity costs that are calculated per kWh. 

Voltage optimisation is not right for every site, but it can be effective where supply voltage is consistently high and loads are suitable. A simple site survey can confirm whether there is a strong case to install equipment and what level of savings to expect. 

Optimise metering and data services 

Incorrect or unnecessary metering arrangements can add avoidable fixed costs to your bill. Start by confirming that you have the correct meter type – for example, half‑hourly where usage justifies it, or non‑half‑hourly for simple, smaller sites. 

You should also: 

• Remove redundant sub‑meters that serve closed areas or decommissioned equipment. 
• Check data collector and aggregator charges and benchmark them against the market. 
• Ensure that meter technical details and MPAN data are accurate and up to date. 

Better metering can cut admin costs and give you the data you need for capacity reviews, load shifting and continuous optimisation. 

Making the most of levies, reliefs and governance 

Some policy‑related non‑commodity charges can be reduced if you qualify for exemptions or relief schemes.  

For example, Climate Change Levy discounts are available through Climate Change Agreements, and certain charities and public‑sector bodies can access reduced rates. 

Build a simple checklist that covers: 

• CCL exemptions or reduced rates. 
• Eligibility for Climate Change Agreements if you are in an energy‑intensive sector. 
• Any charity or public‑sector reliefs that apply to your sites, such as the reduced rate of VAT. 

Remember to continue with quarterly capacity reviews, annual TCR and tariff validation, monthly bill checks, and ongoing monitoring of demand peaks.  

Treat non‑commodity charges as a managed cost category, and you will be better placed to handle future changes, from rising TNUoS charges to new schemes like the RAB nuclear levy. 

Example non‑commodity optimisation checklist 

Here is a simple checklist you can apply across one or more sites to stay on top of non‑commodity costs. 

By working through this checklist, you turn non‑commodity charges from a confusing line on the bill into a managed, optimised cost that supports your wider energy and net zero strategy. 

How Bionic can help 

If you want expert support to put this guide into action, Bionic can help you make sense of rising non‑commodity costs and find the right business energy contract for your needs.  

Our tech‑enabled team compares quotes from a panel of trusted UK suppliers, talks you through the options without any jargon, and support you with the switch.  

All you need to get started is your business name and postcode – we use secure smart data to do the heavy lifting, so you can focus on running your business while we work on cutting your energy costs. 

FAQs on energy cost optimisation 

Still unsure what energy cost optimisation means for your business? Check out the answers to our most frequently asked questions: 

Can an incorrect MPAN lead to higher non-commodity charges on my business energy bill? 

Yes. If your MPAN contains errors in the profile class or distribution region digits, your TCR band and network charges may be miscalculated, meaning you could overpay until the data is corrected with your DNO or supplier. 

Does my MPAN profile class affect how non-commodity costs are calculated? 

Yes. Your profile class, encoded in the first two digits of your MPAN, determines how your consumption is estimated for billing purposes, which directly influences the network and balancing charges applied to your account. 

Will my MPRN change if I switch to a different gas network operator or IGT? 

No. Your MPRN is tied to the physical gas supply point at your premises, not your supplier or network operator, so it remains the same even if your supply is managed by an Independent Gas Transporter. 

How does my MPAN relate to my agreed supply capacity (kVA)? 

Your MPAN identifies your supply point, and the capacity agreed at that point determines your maximum permitted demand. Reviewing both together is essential when reducing contracted kVA to cut fixed network charges. 

What happens to my MPAN when Market-wide Half-Hourly Settlement (MHHS) is fully rolled out? 

Under MHHS, the profile class information in the MPAN top line will change for many sites, as half-hourly settlement replaces estimated profiles. It’s important to verify your MPAN data is updated correctly during the transition. 

Can having the wrong meter profile class on my MPAN result in me paying the wrong DUoS charges? 

Yes. An incorrect profile class can place your site in the wrong settlement category, causing Distribution Use of System charges to be calculated on estimated rather than actual half-hourly data, potentially costing more than necessary. 

If I take on a new business premises, how quickly should I confirm the MPAN and MPRN with a supplier? 

You should confirm both numbers as soon as possible after taking on a property, as delays can leave you on deemed rates, typically the most expensive tariff a supplier offers, until a formal contract is in place. 

Is there a link between my MPRN and the charges I pay for gas transportation? 

Yes. Your MPRN identifies your gas supply point within the network, and that location determines which gas transporter's tariff applies to your site, which affects the transportation costs included in your overall gas bill.