An easy guide to non-commodity costs & the energy triad period

Running a business can be tough - throw in the winter period and the seemingly never-ending rise in energy prices, and it gets even harder. 

With ‘Triad season’ upon us once again and non-commodity costs frequently increasing, it begs the question: what impact do non-commodity costs have on your business bills, and how can you save money?

With this helpful Bionic guide, we’ve broken down everything you need to know about non-commodity costs and the Energy Triad period to get you up to speed. 

Five-point summary on non-commodity costs & the energy triad period

1. Non-commodity costs make up roughly half your electricity bill. For most UK businesses, charges such as TNUoS, DUoS, government levies, and balancing costs account for between 40% and 60% of the total electricity bill — meaning they can equal or exceed what you're paying for the energy itself.
2. The Energy Triad period is the highest-stakes window for half-hourly meter users. Triad charges are based on your consumption during just three half-hour periods of peak demand across the entire winter (November–February), typically between 5 pm and 6:30 pm. Reducing usage during these specific windows — using Triad alerts or demand-shifting — can cut your TNUoS charge substantially.
3. The Triad system is being reformed under the Targeted Charging Review (TCR). Ofgem's TCR is moving residual network charges away from consumption-based Triad periods toward fixed capacity-based charges. This will change how businesses are charged and reduce the benefit of Triad avoidance over time — making it important to review your energy strategy ahead of your next contract renewal.
4. There are practical steps businesses can take to reduce their exposure. These include shifting energy-intensive activity outside Triad hours, investing in on-site generation or battery storage, right-sizing capacity agreements, and working with an energy broker to find the most suitable contract structure.
5. Non-commodity charges vary by business type, meter type, and location. Manufacturers, hospitality businesses, and those on half-hourly meters are most directly affected. Smaller businesses on standard meters still pay these charges — they're just less visible, bundled into the unit rate — which is why understanding your bill in full is the first step to managing costs effectively.

Are non-commodity costs fixed on a fixed-rate business energy contract?

On fixed-rate business energy contracts, non-commodity costs are generally variable, even though the unit rate for energy itself is fixed. Here's how it breaks down:

• What's fixed: The commodity element — the wholesale energy cost — is locked in at a set pence-per-unit (p/kWh) rate for the contract term.
• What's variable (non-commodity costs): These are passed through at cost and can change during the contract term:
  • Network charges — transmission and distribution costs set by Ofgem and the network operators (TNUoS, DUoS, BSUoS). These are reviewed periodically and can rise or fall.
  • Environmental levies — schemes like the Renewables Obligation (RO), Contracts for Difference (CfD), and Energy Company Obligation (ECO) are government-set and fluctuate annually.
  • Capacity Market charges — set through government auctions and subject to change.
  • Metering charges — can vary depending on meter type and operator agreements.
  • Climate Change Levy (CCL) — a government tax that can change with each Budget.

Non-commodity costs typically make up 40–60% of a business energy bill, so even on a "fixed" contract, bills can still move meaningfully if these pass-through charges shift.

Look for whether your supplier uses a "fully fixed" or "pass-through" structure. A small number of contracts do fix non-commodity costs too (fully fixed), but these are less common and often priced at a premium to account for the supplier absorbing that risk.

If you're reviewing a contract, the key clause to look for is how non-commodity or third-party charges are handled. Most standard fixed-rate contracts will include wording that allows these to be passed through at cost.

When you switch with Bionic, our energy experts can explain all this to you, and more, to make sure you choose the right type of contract from the right supplier.

What are non-commodity costs?

Non-commodity costs are typically costs that originate from a third-party, such as the government, which are then passed on to your energy supplier, and finally, are passed down to you in your bills.

The total amount that you’ll pay for your energy can be broken down into three separate charges:

• Wholesale price — This is the cost of the power that we use (also known as the commodity).
• Cost of power supply — This includes the cost of power lines that supply energy to homes and businesses.
• Fees and taxes — A variety of taxes and fees from the government.

In simple terms, the non-commodity charge is calculated by dividing the sum of energy provided to the nation by how much we use. The higher the demand, the bigger the drive we’ll see in wholesale prices. Supply and demand were a major part of the energy price rises witnessed across 2022. However, businesses may face higher non-commodity as the country moves toward net zero. 

Put simply, net zero refers to the balance between the amount of greenhouse gases that are produced and the amount that’s removed from the atmosphere. We’ll reach net zero when the amount that we add is no more than the amount that’s taken away.

What percentage of my energy bill are non-commodity costs?

Non-commodity costs now make up a significant portion of your total business energy bill — and the share has been growing. For most UK businesses on half-hourly meters, non-commodity charges typically account for between 40% and 60% of the total electricity bill, depending on your sector, location, and consumption patterns.

To put that in perspective: even if wholesale energy prices fall, your bill may not drop as much as you'd expect, because the non-commodity portion is set independently of the energy market.

Here's a rough breakdown of how a typical business electricity bill is structured:

_{Note: These figures are approximate and will vary based on your contract type, meter type, and grid supply point.}

Non-commodity charges at a glance

Many individual charges fall under the non-commodity umbrella. Here's a quick overview before we go into each one in more detail:

Non-commodity costs explained

Most likely, you’ll see a wide range of charges on your business energy bill. Here we’ll break down some of the most common ones you’ll find:

Transmission Network Use of System (TNUoS)

Transmission Network Use of System — also known as TNUoS, for short — recovers the cost of installing and maintaining the transmission of electricity from power stations to grid supply points across systems in England, Wales, Scotland and offshore. 

Renewables Obligation (RO)

The Renewables Obligation (RO) is designed to ensure licensed electricity suppliers in the UK source an increasing proportion of their supply to customers from renewable sources. 

The RO came into effect in 2002 in England, Wales and Scotland, followed by Northern Ireland in 2005. 

Distribution Use of System (DUoS)

When looking at your electricity bill, you may notice a charge for ‘Distribution Use of System’, otherwise known as DUoS. It covers the cost of installing and maintaining the local electricity distribution networks and you’ll pay it in addition to your kWH unit charge. 

Contracts for Difference (CfD) 

The Contracts for Difference scheme (CfD) is the government's main action for supporting low-carbon electricity generation. 

The aim is to incentivise investment in renewable energy by providing developers of projects with high upfront costs and long lifetimes which, in turn, offers direct protection from volatile wholesale prices. It also aims to protect consumers from paying increased support costs when electricity prices are high. 

Balancing Service Use of System (BSUoS)

The BSUoS charge helps to recover the day-to-day costs of operating the transmission systems.

Generators and suppliers are liable for these charges, which are calculated daily as a flat tariff for all users. A monthly forecast is provided to all, but the BSUoS charge will depend on the balancing actions that have to be taken daily, so the prices you’ll see on your bill can fluctuate. 

Capacity Market (CM)

The Capacity Market is designed to support the development of more active demand management in the electricity market. In short, its aim is to ensure the security of the electricity supply by providing a payment for reliable sources to deliver energy when it’s needed. 

Feed-in-Tariff (FiT)

Introduced on 1st April 2010, the Feed-in-Tariffs scheme was designed by the government to promote the uptake of low-carbon and renewable energy generation. 

The scheme requires participating licensed electricity suppliers to make payments on electricity that’s generated and exported by accredited installations. 

Eligible installations that use one of these technology types can apply for the accreditation:

• Wind
• Solar photovoltaic panels (Solar PV)
• Micro combined heat and power (Micro CHP)
• Hydro
• Anaerobic digestion (AD)

Line losses

Line loss refers to the quantity of electricity that’s lost during transmission and distribution across the electric grid. 

Because the utility supplier must purchase enough energy to cover the estimated cost of consumption — including the line loss amount — this loss gets divided and is then passed on to customers. 

Worked example — what could non-commodity costs mean for your bill?

To illustrate how non-commodity costs translate into real figures, here's a simplified example based on a typical SME.

Example business: A small manufacturing firm in the Midlands, consuming 100,000 kWh of electricity per year, on a half-hourly meter.

In this example, non-commodity costs account for approximately £9,000, or 50% of the total bill, despite the business having no direct control over most of these charges.

If the same business reduced its consumption during the three Triad half-hour periods by 50%, it could reduce its TNUoS charge by an estimated £1,000–£1,500 per year, simply by shifting demand outside the 5 pm to 6:30 pm window.

_{These figures are illustrative only and will vary based on your location, contract type, supplier, and consumption profile. Contact Bionic for a personalised assessment.}

What are transmission and distribution costs?

Trying to build and maintain a network of cables, transformers and pylons is no easy feat — and it comes at a cost. 

These transmission and distribution costs will vary from provider to provider, but it largely depends on the type of power plant that’s supplying the power to your source, which is then supplying it to you. This is because there must be a constant supply of power flowing through the network that prevents power cuts or damage, so your bill could be priced differently each month to reflect this.

What is the Energy Triad period?

To manage the huge influx of demand on the network during the most energy-intensive period of the year, which is usually between November and February, the National Grid imposes a charge. 

This charge, which is known as the Transmission Use of System (TNUoS) charge, is used to maintain the UK’s electricity grid to ensure future supply, with the charge being based on your business’s energy consumption during the ‘Triad’ period.

Essentially, triads occur when high business demand meets the domestic mid to late afternoon tea-time period, which causes a spike in the amount of energy that’s being used at one time. 

For more information, check out our guide to TNUoS and DUoS charges.

How do Triads impact your business energy bill?

Triad periods impact businesses with half-hourly meters, as the charge is proportional to a business's energy use during the three half hours of the highest demand (the Triad period). This typically runs from 5:00 pm to 6:30 pm every day from November to February. This is also linked to a business's location, as where you operate and which grid supply point you’re on can impact how much you’ll pay.

If a business doesn’t consume electricity during the three Triad periods, then it won’t have to pay for half-hourly TNUoS charges. However, for some businesses, this simply isn’t possible. 

Why should businesses care about Energy Triads?

Once you receive your bill, you should see a specific TNUoS charge applied, based on the amount of energy that you used during the Triad period. 

Essentially, if it’s possible to not run your business during the hours of 5:00 pm - 6:30 pm, you’ll help to minimise consumption and lower your bill when the TNUoS is applied. 

However, it’s important to remember that the TNUoS charge only forms a part of the non-commodity cost on your bill, with other distribution costs still having to be paid for. 

How to reduce your non-commodity costs

While some non-commodity charges are unavoidable, there are practical steps businesses can take to reduce their exposure, particularly with network charges such as TNUoS.

Shift energy use outside Triad hours 

The single most effective action for businesses on half-hourly meters is to reduce consumption between 5 pm and 6:30 pm on weekdays from November to February. This could mean scheduling energy-intensive processes, such as heating, manufacturing equipment, or commercial ovens, to run earlier or later in the day. A time-of-use tariff can help with this.

Sign up for Triad warning alerts 

Several energy management platforms and consultants offer real-time Triad warning notifications. These alert you when a Triad period is likely to occur. This allows you to reduce consumption in the moment. Since only three half-hour periods across the whole winter determine your TNUoS charge, avoiding even one or two can make a meaningful difference.

Invest in on-site generation or battery storage 

Businesses with solar panels, wind turbines, or battery storage systems can draw on their own supply during peak periods, reducing their reliance on the grid at the moments that matter most. This doesn't just lower non-commodity charges — it reduces wholesale costs too.

Review your capacity agreement 

Your capacity agreement with the network determines the maximum amount of power you can draw at any one time. If your agreed capacity is higher than your actual usage, you may be paying more than necessary. Reviewing and right-sizing this agreement with your supplier can reduce certain standing charges.

Work with an energy broker 

A business energy broker or consultant can review your bills, identify where non-commodity charges are highest, and recommend contract structures or behavioural changes that reduce your exposure. At Bionic, we compare business energy deals across a panel of leading suppliers to help you find the most competitive rate.

How are the Energy Triads changing?

Over time, it’s become harder to predict when the Triad period will occur because businesses are trying to avoid them. 

The changing nature of the UK’s decentralised energy system means that the cost of maintaining and operating it is at an ever-increasing high. Owing to this, the Triads are expected to be replaced by a system called Targeted Charging Review (TCR), which will charge users based on the size of their capacity agreement with the National Grid. This came into effect across 2022 and 2023.  

What is the Targeted Charging Review (TCR) and what does it mean for your business?

The Targeted Charging Review (TCR) is Ofgem's long-running reform of the way network charges are recovered from energy users. Its aim is to make the system fairer, more transparent, and less distorted by the avoidance behaviour that has developed around the Triad system.

Why is TCR being introduced? As more businesses have become aware of Triad periods and taken steps to avoid them, the cost of maintaining the network has had to be recovered from a smaller pool of users — effectively penalising businesses that can't shift their demand. The TCR is designed to address this imbalance by moving toward residual charges that are based on fixed capacity rather than consumption patterns.

How will charging change? Under TCR, residual network charges — which currently include TNUoS — will be based primarily on the size of your capacity agreement with the National Grid, rather than your consumption during peak periods. This means:

• Businesses that currently reduce demand during Triad periods will lose some of the benefit of doing so
• Businesses that have historically been unable to avoid Triad periods may see fairer, more predictable charges
• The focus shifts from when you use energy to how much capacity you have reserved

What should businesses do now? Even as TCR is phased in, Triad avoidance remains relevant in the near term — and demand flexibility will still be rewarded under future market structures. The most important thing businesses can do is stay informed, review their contracts regularly, and seek professional advice before their next renewal.

Non-commodity costs by business type

Non-commodity charges affect businesses very differently depending on your sector, the size of your premises, and when you use energy. Here's how different types of business are typically impacted:

Manufacturing and industrial businesses 

Manufacturers tend to have high, consistent energy demand and are often on half-hourly meters, which means TNUoS and Triad charges are particularly relevant. Energy-intensive industries that run heavy equipment during the late afternoon are among the most exposed to Triad-period charges, and demand-shifting strategies can deliver the biggest savings for this group.

Hospitality and catering (restaurants, pubs, hotels) 

Hospitality businesses are often busiest in the evenings, which overlaps directly with the Triad window of 5 pm to 6:30 pm. This makes Triad avoidance difficult in practice. However, energy efficiency measures, such as upgrading to more efficient kitchen equipment or installing smart controls, can reduce overall consumption and lower the non-commodity charge base.

Offices and professional services 

Most office-based businesses close or wind down activity by early evening, which can make demand-shifting more feasible. Businesses in this sector often benefit from reviewing their capacity agreements, as reserved capacity is frequently set higher than actual peak demand.

Retail 

Retailers with extended evening trading hours face similar challenges to hospitality businesses. Those with refrigeration or air conditioning running continuously should pay particular attention to DUoS charges, which vary by time of day and can be reduced by shifting non-essential loads.

Small businesses and sole traders 

Smaller businesses on standard credit meters rather than half-hourly meters are generally less directly exposed to TNUoS Triad charges, but they still pay non-commodity costs as part of their unit rate. If you're unsure what type of meter you have or how your charges are structured, it's worth speaking to your supplier or a broker.

Get help with your energy bills from Bionic

At the end of the day, we all want to save money where possible, but the rise in energy bills is making it increasingly harder to do so. Get in touch today with the Bionic team to discuss your needs or get more information on business energy, business electricity or business gas today. 

Frequently asked questions (FAQS) on non-commodity costs & the energy triad period

Still not quite sure about non-commodity costs & the energy triad period? Here are the answers to some of the most frequently asked questions.

How much of my business electricity bill is made up of non-commodity costs?

Non-commodity costs are expected to make up around 64% of UK business electricity bills in 2026. The proportion has been rising steadily for a decade, with no sign of reversing.

Has the Targeted Charging Review replaced the Triad system?

Largely yes. As of April 2023, half of all regions have no Triad charge at all, with the remainder reduced to around 0–10% of what they were, replaced by fixed daily standing charges based on your meter size and capacity band.

How does the TCR determine which charging band my business is placed in?

A site's band is decided by its average capacity or consumption between May 2022 and April 2024, with bands now fixed until March 2031. This means your current usage may no longer reflect what you're being charged.

Are non-commodity costs fixed on a fixed-rate business energy contract?

No. Non-commodity costs are typically passed through at cost, even on a fixed-rate contract. Each supplier may choose to pass on TCR costs differently, so it's worth asking your supplier or broker how they account for these charges in their quotes and checking the small print carefully.

What new non-commodity charges have been added to business energy bills recently?

Nuclear RAB charges began in December 2025 at an initial rate of £3.540/MWh to fund Sizewell C, and Capacity Market levy rates are forecast to nearly double from £140 to 150 per MWh in 2025/26, to £270 to 280 per MWh in 2026/27.

What has happened to non-commodity costs from April 2026, and why?

Network investment to reinforce the grid is driving a near-doubling of fixed residual transmission charges, from £3.8bn in 2025/26 to around £7.5bn in 2026/27, primarily to connect large-scale offshore wind to the national grid. For more information, check out our guide to TNUoS and DUoS charges.

Can businesses still take action to reduce the impact of non-commodity charges?

Triad avoidance is largely redundant, but the Capacity Market still applies during peak windows of 16:00 to 19:00 on weekdays from November to February, so shifting energy-intensive activity outside those hours and reviewing your agreed supply capacity can still make a meaningful difference to your bill.

What is Market-Wide Half-Hourly Settlement (MHHS), and how will it affect non-commodity costs?

From October 2025, the industry began transitioning to Market-Wide Half-Hourly Settlement (MHHS), with full implementation by May 2027. This will give businesses and homes access to more detailed usage data and could eventually enable smarter, time-of-use pricing that makes it easier to reduce exposure to peak-period non-commodity charges.