In short
Network companies recover the revenue Ofgem allows them through charges on network users. There are three main use-of-system charges: DUoS for the distribution networks, TNUoS for the transmission network and BSUoS for balancing the system. On top of these, customers pay a one-off charge when they connect. Together, network and system costs make up a significant share of a typical household electricity bill.
DUoS: distribution use of system
DUoS charges pay for the 14 distribution networks. Each DNO sets its own tariffs, but all use common methodologies, so the structure is the same across Great Britain:
- The Common Distribution Charging Methodology (CDCM) covers customers connected at low and high voltage, which is almost everyone.
- The EHV Distribution Charging Methodology (EDCM) covers the largest sites, connected at extra-high voltage, with site-specific charges.
For most non-domestic customers, DUoS has a time-of-day unit rate, with red, amber and green time bands. Red bands cover weekday evening peaks, when the network is busiest, and cost the most. That gives batteries and flexible demand a reason to avoid those hours.
Suppliers pay DUoS and pass it on in their tariffs. Generators connected to the distribution network can receive DUoS credits, or pay charges, depending on whether their output helps or hinders the network at peak times.
Residual charges
Only part of the network's cost reflects how a particular user affects it. The rest, the "residual", has to be recovered anyway. After Ofgem's Targeted Charging Review, the residual for both DUoS and TNUoS is charged to final demand as a fixed daily amount, set by band. Households all pay the same residual, while businesses are banded by voltage and size. The change, phased in from 2022, stopped customers with on-site generation avoiding their share of the residual by importing less at peak times.
TNUoS: transmission network use of system
TNUoS charges pay for the onshore and offshore transmission network. They are set by NESO and, unlike DUoS, are strongly locational.
- Generators pay a tariff that depends on which of the generation zones they are in. Zones far from demand, such as the north of Scotland, pay the most, because more transmission is needed to carry their power south. Generators near big centres of demand can pay little or receive a credit.
- Demand pays a locational element plus the residual, which forms the larger part.
The locational signal is controversial. Scottish renewable generators argue the charges are high and volatile, and are rising as the transmission network expands. Others see the signal as a useful way to encourage generation where the network can take it. After the government decided in 2025 to keep a single national wholesale price rather than adopt zonal pricing, attention moved to whether TNUoS should be reformed to give a clearer, more stable locational signal. Follow network charging for the latest.
BSUoS: balancing services use of system
BSUoS recovers NESO's cost of balancing the system second by second: paying generators to turn up or down, buying reserve and frequency response, and managing constraints where the network can't carry all the power generated. Constraint costs have risen sharply as more wind connects in Scotland ahead of the transmission upgrades to carry it.
Since April 2023, BSUoS has been charged only to final demand, not to generators, at a tariff fixed in advance for each period. The aim was to make costs more predictable and to stop GB generators being disadvantaged against those in connected markets.
Connection charges
When a customer connects, they pay a one-off connection charge for the work needed. The key question is how much of any reinforcement of the wider network they pay for.
- Since April 2023, demand customers on the distribution network no longer pay for reinforcement at the voltage level above their connection, and generators pay a capped amount. The rest is recovered through DUoS. This "shallower" boundary came from Ofgem's Access and Forward-looking Charges review.
- Transmission connections have long been close to "shallow": customers pay for the assets used only by them, while wider reinforcement is paid for through TNUoS.
Contestable parts of a distribution connection can be built by an ICP. See DNOs, IDNOs and ICPs and getting a grid connection.
Who sets the rules
The charging methodologies sit in industry codes: the Distribution Connection and Use of System Agreement (DCUSA) for distribution and the Connection and Use of System Code (CUSC) for transmission. Industry parties propose changes, and Ofgem approves or rejects them. Ofgem can also lead wider reviews, as it did with the Targeted Charging Review and the Access review. The total amount recovered is set separately, by the RIIO price controls.
Sources
Based on Ofgem decisions, NESO's charging statements and the DCUSA and CUSC methodologies. Tariffs change every year: check your DNO's charging statement or NESO's TNUoS tariffs for current figures.
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Latest stories on Network Charging, RIIO Price Controls. For terms, see the glossary; for key dates, the policy timeline.