I’ve been in energy long enough to know that the industry has a habit of making simple things complicated, and then using that complexity to avoid accountability. What’s happening now is one of the clearest examples I’ve seen.
There’s a conversation happening in energy right now that most businesses are finding out about the hard way. A business signs an energy contract. They budget accordingly. Then a charge appears on the invoice – one that is significantly larger than anything they’d anticipated. And when they call to ask about it, the answer, packaged in various degrees of politeness, is: “We have the right to do this. It’s in the terms.”
What the charge actually is
The charge in question is called the TNUoS Residual Banded charge. TNUoS stands for Transmission Network Use of System, which tells you almost nothing useful, so here’s a better way to think about it:
The UK’s electricity transmission network – the high-voltage infrastructure that moves power from where it’s generated to where it’s used – needs to be maintained and upgraded. TNUoS is the mechanism by which the cost of that gets distributed across all business electricity users. It shows up as a standing charge on your bill.
What changes this month is the scale of it. NESO, the body that sets the rate, published its final number for 2026 at 60% higher than last year’s. The reason is structural: years of underinvestment in grid infrastructure, accelerated network upgrade requirements as more renewable generation comes online, and a cost base for running the transmission system that has grown substantially.
What’s happening now
That 60% figure is significant on its own. What makes it exceptional is how suppliers are responding.
Suppliers across the market are reviewing their contract books and reaching the same conclusion: absorbing this increase would damage their margins. So, instead, a significant number are invoking clauses that allow for passthrough of “industry charges” and presenting businesses with bills substantially higher than what they expected when they signed. The legal basis varies – some contracts had explicit passthrough clauses, some invoked broader terms – but the outcome is consistent: a charge that a business did not plan for is landing on their invoice, and the supplier is treating that as the end of the conversation.
There’s a long tradition in contract law of distinguishing between a genuine unforeseen event and a foreseeable risk that one party simply chose not to price in. The TNUoS trajectory was public information. Ofgem flagged the direction of travel. The question isn’t whether suppliers knew it was coming – many did – it’s whether they chose to build that into their pricing when they made the sale.
For a pub, a manufacturer, a food retailer, a care provider – businesses that built their operating costs around what they believed was a stable contract – the impact will cause a real hole in cashflow, and it is arriving without warning.
The structural problem underneath it
TNUoS is what’s called a non-commodity cost, or NCC – entirely separate from the cost of energy itself. It doesn’t reflect how much electricity was generated or how efficiently the grid ran. It’s a regulatory charge, set by a third party, based on infrastructure decisions made decades ago and updated annually. Businesses have very limited visibility into what it is, how it’s calculated, or what they can do about it.
TNUoS is one of several NCCs businesses pay – alongside the Climate Change Levy, the Nuclear RAB levy, distribution charges, and others – each with its own calculation method and annual update cycle. There is no standardised approach across the industry for how these charges get priced, communicated, or updated. Some suppliers bundle them into unit rates and adjust quietly. Some show them as line items but reserve the right to move them. Some disclose them clearly and pass them through at cost. Businesses have no reliable way to compare, no consistent framework to interrogate, and no recourse when the number changes.
This is a structural feature of an industry that has never been required to do better. The regulation governing how NCCs are handled in business energy contracts is weak, fragmented, and long overdue for reform. There should be a consistent, mandatory standard for how these charges are displayed, how changes are communicated, and what suppliers can and cannot do with them once a contract is signed.
NCCs need to be fixed, stable, and transparent – not just for customers but as a regulatory requirement on every supplier – so that the behind-the-scenes reforecasting that produces surprise invoices in April simply can’t happen.
What we’ve done at tem
For every customer on a contract agreed before October last year, we are absorbing the TNUoS increase in full. For customers on contracts agreed after October 2025, TNUoS has always been shown as an explicit passthrough with no margin applied.
In some earlier contracts, we had the legal right to pass it through. We chose not to, because our model allows it: tem’s ability to operate outside the wholesale market means we carry less exposure to these shocks and can absorb them. When we win, our customers win. This is what that looks like in practice.
The questions worth asking before the next April
TNUoS is one charge. There will be others. The Climate Change Levy changes this month too, for the first time in five years. The Nuclear RAB levy, introduced last November, is a new addition to most business bills entirely. The NCCs that make up roughly 50 to 60 percent of a business energy bill are not static, and they are not simple.
A contract that includes a standing charge is not automatically a stable bill. The question to ask – now, and at every renewal – is what that standing charge actually contains, and what your supplier has the right to do with it if a regulatory charge moves against them.
If you want to understand what your bill actually contains and what your current contract does and doesn’t protect you against, reach out. We’d rather have that conversation before the next April than after it.
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