Third Party Costs Explained: a video series

Third Party Costs (TPCs) are a big piece of the energy bill puzzle, yet often the least understood.

Our TPCs Explained hub offers bite-sized, accessible explainer videos to make non-energy costs easier to understand – exploring each TPC in detail and explaining why they’re important.

Whether you’re new to energy management or looking to refresh your knowledge, TPCs Explained will help you build confidence in the power cost stack – one video at a time.

What are third party costs on a business energy bill?

Third party costs (TPCs) are parts of a business energy bill that go beyond the price of the electricity or gas itself. While the price of wholesale electricity typically accounts for around 40% of a bill, the remaining 60% is made up of TPCs – or non-commodity costs (and sometimes called non-energy or pass-through charges). Although this can vary depending on the type of user you are, your consumption and location.

What do third party costs pay for?

These costs fund the infrastructure and services that keep the UK’s energy system running. They include:

• Network costs - to support investment in, or the operation and management of, the physical electricity transmission and distribution networks across GB.
• Rebalancing costs - to recover the costs of exemptions and rebates provided to energy-intensive industries, as well as schemes that offset higher network costs in certain regions, such as northern Scotland.
• Decarbonisation support costs - to support renewable energy deployment, such as solar panels and wind turbines, by funding certain schemes.
• Other costs - to cover mechanisms like the Capacity Market, which supports the GB system in having sufficient generation capacity to meet demand, along with taxes such as the Climate Change Levy and operational costs for central market systems.