Elexon costs explained
Welcome to our Third Party Costs explained video series. Before enjoying this content we recommend you refer to our disclaimer and associated material.
The information in this video and article was accurate as of 1 April 2025. We update our TPCs Explained hub every Spring to reflect any changes.
What’s Elexon?
Elexon is the administrator for the Balancing and Settlement Code (BSC). This is the main industry code that underpins the market and ancillary balancing actions that National Energy System Operator (NESO) must take.
Elexon is responsible for industry settlements and reconciliation, ensuring that metering information is reflected in the charges and payments made. It also ensures that users on the system are billed accurately. Additionally, it was appointed market facilitator for distributed flexibility in July 2024.
How does Elexon work?
Elexon tracks and compares the amount of electricity that generators say they’ll produce, and what suppliers say their customers will use, against what’s actually generated and consumed in real time. If there’s a difference, Elexon calculates the imbalance and facilitates the financial settlement between parties. This helps maintain a fair and stable market.
In addition to settlements, Elexon also administers third party charges like Balancing Services Use of System (BSUoS) and the settlement charges suppliers pay and often pass on to consumers.
How much of your energy bill does Elexon account for?
Elexon charges suppliers a wide range of discrete items, and suppliers then pass them on to consumers’ electricity bills. These items include charges for each balancing mechanism unit (BMU), metering system, and specific charges around projects to improve settlement. For the sake of simplicity and customer convenience, we aggregate all these charges into a single line item.
The aggregated “Elexon” charge is the smallest of the third party charges that we explicitly forecast for our customers. It’s expected to account for less than 1% of the bill in 2025.
How are Elexon costs recovered?
BSC parties pay for Elexon’s costs and the contracted costs of BSC agents. They also cover the central costs for implementing programmes such as the Market-wide Half Hourly Settlement (MHHS).
Generators will recover these costs in the price they sell power for, and suppliers recover these charges in end-user bills.
Will you know about Elexon costs in advance?
Elexon publishes annual budget forecasts, including an estimate of total BSC costs and how it will recover them from market participants. Some of the charges are known in advance, others are not.
What makes up the Elexon charge?
The Elexon charge comprises multiple ‘micro-charges’. We help to simplify things in our Electricity Prices Explained guide, published each Spring and Autumn, by combining this range of very small charges into a single third party cost under the Elexon name. These charges are split across meter points, volume, and a supplier’s number of Balancing Mechanism Units (BMUs).
What are the key drivers for the Elexon charge?
The four main drivers of this charge are:
- The costs in running the central settlements
- Total demand
- The number of meter points
- New programmes and initiatives that impact settlement
To learn more about the other TPCs in your energy bill, head to our TPCs explained hub using the button below. Or, to understand more about electricity prices, download our latest bi-annual Electricity Prices Explained guide.
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