From 1 April 2026, UK business energy consumers will be subject to a major shift in the way electricity network costs are recovered.
Transmission Network Use of System (TNUoS) residual charges, the standing charge element of transmission network costs, are set to almost double in a single year.
Why are rates increasing?
The 2026 change aligns with the onset of the RIIO-ET3 price control period, a regulatory framework that sets allowed revenues for Transmission Operators.
Over the next five years, it’s estimated that the grid requires somewhere in the region of £80bn worth of investment. This is required to ensure effective connection of an increasingly renewable network, to reinforce existing infrastructure, and more broadly to move generated power from the point of production to the point of consumption.
For instance, the existence of offshore North Sea wind generation, renewables in the far north of Scotland, and large-scale solar projects all mean that significant reinforcement of the network is required to reach key national demand centres in the South and Midlands. This follows years of underinvestment in necessary infrastructure.
In short, businesses are paying for the infrastructural changes required in order for the National Grid to facilitate delivering the UK’s net zero future.
Accordingly, the National Energy System Operator’s (NESO) is set to vastly increase the amount it charges, and hence collects from, business energy consumers. Their latest Five-Year View forecast, the revenue for TNUoS demand residual is forecasted to rise from £3.84bn in 2025/26 to £7.52bn in 2026/27.
Thereafter, rates are forecasted to increase consistently, likely indexed to an inflationary factor. By the end of the subsequent five-year run, the revenue figure is expected to reach £11.75bn.
How does this affect my business’ energy rates?
These charges are levied to businesses on a standing charge basis. They will appear on your energy invoice as a p/day, £/day or even £/month figure depending on your supplier.
This means that reducing your consumption has no impact on the amount you will pay.
Banding thresholds
These charges are applied to each business’ electricity meter based on connection voltage and agreed capacity (kVA). These thresholds were established during Ofgem’s Targeted Charging Review (TCR). They are numbered 1 to 4 with the kWh or kVA thresholds alternating dependent on whether your meter is Non-Half Hourly (NHH) or a Half Hourly (HH) meter, be it Low Voltage (LV), High Voltage (HV) or Extra High Voltage (EHV). Meters in higher bandings could see significantly larger increases.
Based on the latest draft releases from NESO, the below increases are forecasted to occur from 1st April 2026 onwards. Note that the current financial year (Apr 25 – Mar 26) is unaffected and that final tariffs will be published in late January 2026:
How we can help?
These increases are, to some extent, unavoidable, but businesses are not powerless and we can help to mitigate some of this additional cost risk.
1. Cost Forecasting and Budgets
With our budget reporting service, we can help to model your energy costs for 2026/27 and onwards using NESO’s latest forecast.
2. Formal banding and kVA review
With a forensic bill audit and data review, we can check the efficacy of your current agreed capacity levels (kVA) and, if appropriate, look at reducing these to engender savings and potentially move you into a lower charging band.
3. Check Contract Terms
If you’re on a fixed price contract, a review of your current supply agreement may be necessary to see if your energy supplier has the ability to review your agreed rates mid-contract from 1st April 2026 onwards.
4. Investigate Potential Exemption Schemes
Your business may qualify for one or a number of potential energy cost relief schemes. These will be based on your energy consumption and the nature of your industry/sector. While these do not immediately remove TNUoS charges, they can help reduce your costs and potentially bring in some longer-term subsidised credits.
This 2026/27 charging year marks one of the most significant cost shifts in the electricity network costs since privatisation. With the extent of these standing charges doubling almost overnight, your business cannot afford to wait until 31st March 2026 to react.