10 ways to mitigate April’s rising electricity charges
Smart meter © Adobe Stock Wholesale electricity costs typically make up just one-third of the average electricity bill, with other “non-commodity costs” – in other words, standing charges – comprising more than 60%.
These charges cover a range of items including electricity supply costs and funding the UK’s renewable energy schemes.
They are becoming increasingly important and affect everyone from domestic customers to energy-intensive businesses, says NFU Energy’s Edward Kimberley.
See also: Business Clinic: should I lease my land for battery storage?
The rise in charges due to come into effect this spring is being driven primarily by an increase in the cost of maintaining and improving the UK’s ageing electricity supply infrastructure.
The infrastructure must meet rising demands and an evolving, diverse generation supply, Edward explains.
What is changing?
Electricity suppliers pay towards upkeep and improvement of the National Grid through the transmission network use of system (TNUOS) charge, which is passed to customers through bills.
TNUOS is one of several additional charges that make up the average bill.
It is set to rise by 62% from 1 April, to help fund an estimated £3.5bn shortfall in the budget that National Grid requires to upgrade and expand the existing transmission network.
“This increase will provide an existential threat to many farmers and growers,” says Edward, who heads the consultancy’s energy account management team.
“It affects everyone, in every sector to varying degrees; whether you’re an energy-intensive controlled environment horticulture business, a dairy or arable farm.”
To help farmers assess the likely impact on their business, NFU Energy has developed an online TNUOS calculator.
“You’ll need a few bits of information from your electricity bill or energy contract, such as the MPAN number and size of connection.
“But the calculator will then provide a forecast for how your business will be affected over the next five years.”
The NFU is also currently lobbying government, pushing for changes to two schemes that could potentially open up partial relief on standing charges for energy-intensive farm businesses.
What can you do about it?
In the meantime, there are some things farmers can do ahead of the changes to mitigate the impact (see panel below).
Because standing charges are fixed, it is hard to navigate around them, says Edward’s colleague Joshua Robinson, head of utility contract management at NFU Energy.
Measures such as cutting electricity consumption will have limited impact, other than helping to offset some of the higher charge.
However, a better understanding of bills and how they are made up could help to identify potential savings, he says.
For example, standing charges vary depending on what “band” an account falls into.
These bands are based either on electricity use – ranging from less than 3,986kWh/year in band one, up to more than 27,543kWh/year in band four – or on supply capacity, with band one being sub 80kVA capacity and band four greater than 250kVA.
“In 2025, a band one meter normally had a standing charge of £3-£7 a day, while a band four was £23-£53 a day,” says Joshua.
“If there are energy-saving measures you can take that will drop you into a lower band, then it could make a worthwhile difference.”
10 ways to address rising charges
1. Improve energy efficiency
Take accurate and regular meter readings to know how much energy is used and where.
With wholesale costs only making up about one-third of the average bill, reducing energy use has a limited impact, but can still contribute towards offsetting higher standing charges.
2. Consider capacity reduction
Where a business has a sizeable connection, but is not utilising all of it, there may be scope to reduce capacity and, therefore, cost.
However, to do so, the rules currently require capacity to be reduced by at least 50%. The NFU is lobbying government for this to be changed.
3. Review connections
Diverse farm businesses can sometimes have a number of different connections into the business or premises.
Where this is the case, it is worth reviewing the connections to see if they can be consolidated into fewer supplies, thereby reducing some of the associated standing charges.
4. Review your contract
Examine contract terms to gauge what will affect you in future. Consider changing supplier where appropriate.
5. Generate your own energy
Explore the potential for generating electricity on-site, such as with solar PV, to reduce the amount of electricity imported and offset some of the rise in standing charges.
6. Check if any exemptions are available
Some businesses with their own energy generation and half-hourly metering may benefit from small supplier exemption (also known as licensed exempt supply).
This is where suppliers compare half-hourly meter data for both electricity imports and exports.
Where they match, a discount is applied to the import standing charge, and a proportion of relief is also paid on the export (p/kWh).
“In the face of soaring standing charges, this relief has gained enormous popularity in the last nine months,” says Edward.
7. SEG agreements
Examine whether smart export guarantee (SEG) agreements can be used to link import and export supplies together with one company and achieve a higher price for exported electric.
8. Consider grid balancing services
This is not for everyone, but some businesses, or groups of businesses, with larger energy generation connections (>1MW) may be able to generate additional revenue by providing grid balancing services (such as turning generation on/off as required during times of high and low demand).
9. Install a compatible smart meter
The rollout of “time of use” tariffs by 2027-28 will depend on customers having a smart meter.
These charge different prices for electricity according to the time of day, charging less for off-peak power and more during peak times.
10. Go off-grid and achieve complete self-sufficiency
This comes with a set-up cost and requires contingency planning in case of problems with supply.
Energy-saving tips
- Turn off non-critical devices and equipment when not in use, rather than leaving them on standby
- Fit timers on lights and electrical devices to reduce unnecessary usage and allow scheduling of tasks to during periods of cheaper electricity
- Check sensors – for example, motion or light sensors – are working correctly
- Upgrade to LED lighting (LEDs use up to 80% less energy than traditional incandescent bulbs)
- Install programmable thermostats
- Fit variable-speed drives on motors with driving fans and pumps that run for long periods
- Make sure equipment (especially generators, heaters, pumps and so on) is clean and well maintained
- Insulate buildings/pipes/suitable equipment to reduce heat losses
- Choose energy-efficient options when replacing equipment
- Create lighting and heating zones – for example, separate lighting for feeding areas, walkways and machinery zones
- Consider whether natural ventilation can replace mechanical or cooling systems
- Monitor energy use with smart meters or plug-in monitors
- Commission an energy audit, or seek professional advice to identify changes or opportunities for your business