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DUoS (Distribution Use of System) charges for businesses
Distribution Use of System (DUoS) charges make up about 15% of all electricity bills paid by businesses.
They are network charges that pay for the operation, maintenance, and expansion of local electricity distribution networks.
This guide explains the DUoS charges businesses pay and how they can be reduced. Here’s what we cover:
- What are DUoS charges?
- Banding of DUoS charges for businesses
- Components of DUoS charges for businesses
- How can businesses reduce their DUoS charges?
- Factors affecting business DUoS charges
What are DUoS charges?
DUoS (Distribution Use of System) charges are fees paid by businesses and households to cover the cost of maintaining, operating and upgrading the local electricity distribution networks in the UK.
These local grids comprise substations, transformers, underground and overground cables that connect individual homes and businesses in their region to the wider national grid.
DUoS charges are paid to Distribution Network Operators (DNOs), the companies that manage individual regional power grids.
While your business energy supplier is directly responsible for paying the DNO, it collects the money from your business through your monthly business electricity bills.
Who sets DUoS charges?
DUoS charges are set by each individual Distribution Network Operator reflecting the unique circumstances of the local grid, including size, geography, supply, and demand.
DUoS charges are updated each year in April, allowing each operator to adjust their fees to cover infrastructure expansion, changes in regional power demand, and inflation.
Ofgem provides the precise methodology that each DNO uses to calculate its annual DUoS tariffs, covering each customer type. Changes to DUoS tariffs are announced 15 months in advance to allow suppliers to incorporate them into their pricing.
Banding of DUoS charges for businesses
There are four bands of DUoS tariffs paid by businesses and other non-domestic properties. The DUoS band that your business pays depends on the characteristics of your connection, in particular, voltage level, business energy consumption, and Maximum Import Capacity.
Here’s a description of the four bands, along with examples of the types of businesses that fall into each.
| DUoS Bands | Key Charge Types | Typical User |
|---|---|---|
| Band 1 - Small, low-consumption users (<100 kW) | Unit charge, Standing charge | Small retail shops, cafés |
| Band 2 - Medium-sized businesses with moderate energy needs (100 - 500 kW) | Unit charge, Standing charge, Capacity charge | Small factories, warehouses |
| Band 3 - Large businesses with significant energy requirements (500 kW–1 MW) | Unit charge, Standing charge, Capacity charge, Reactive power charge | Large manufacturing plants, hospitals |
| Band 4 - Very large consumers, often connected at high voltage (>1 MW) | Unit charge, Standing charge, Capacity charge, Excess capacity charge, Reactive power charge | Steel mills, data centres |
Businesses in bands 2 to 4 require the installation of half-hourly electricity meters.
Components of DUoS charges for businesses
Distribution Use of System charges are usually not visible on business electricity bills, as they are embedded within the unit rate and standing charges of an electricity tariff.
Below is a summary table outlining the five DUoS charges that may be incurred by businesses connected to the grid. Click on the link for a detailed explanation of each:
| Name of charge | Applies to | Summary |
|---|---|---|
| Unit charge | All businesses | Charges based on the amount of electricity consumed, with varying rates depending on the time of day (Red, Amber, Green bands). |
| Standing charge | All businesses | Daily fixed charge to cover the maintenance of the distribution network infrastructure. Paid regardless of usage. |
| Capacity charge | Half hourly meters | Fixed charges for businesses with Half Hourly meters based on the Maximum Import Capacity agreed with the DNO. |
| Excess capacity charge | Half hourly meters | A penalty charge for businesses that exceed their Maximum Import Capacity at any point during a billing month. |
| Reactive power charge | Half hourly meters | Charges for inefficient electricity use (reactive power), common in businesses with industrial equipment. |
Unit charge
Unit DUoS charges contribute to the unit cost per kWh of electricity consumed in your business energy contract.
DUoS unit charges vary based on the time of use and are divided into three cost bands:
- Red Zone (peak hours, 4–7 p.m.) is the most expensive due to the highest demand.
- Amber Zone (mid-range times) is moderately priced.
- Green Zone (Late evenings, nights, and weekends) is the cheapest because it applies to periods of lowest demand.
Time bands also vary by connection type and region, as residential, commercial, and industrial areas have different supply and demand patterns.
Standing charge
These are the fixed charges all businesses connected to the grid must pay regardless of how much electricity they consume.
This fee covers infrastructure maintenance, including poles, transformers, and substations, that keep the local distribution network operational.
Standing DUoS charges do not fluctuate with usage. They are included in most bills as part of the business electricity standing charge and vary depending on your location and regional Distributed Network Operator (DNO).
Capacity charge
Capacity charges apply to large businesses with half-hourly meters that have agreed a Maximum Import Capacity with their Distribution Network Operator.
It’s a fixed charge for the privilege of a significant power allocation; more details are in our capacity charges guide.
Excess capacity charge
Excess capacity charges are an additional DUoS cost applying to businesses with a half-hourly meter that exceed their agreed Maximum Import Capacity.
These charges are used to penalise businesses that place additional strain on the local electricity grid.
Find out how these are calculated on our excess capacity charges page.
Reactive power charge
Reactive charges are applied to large businesses that demand high quantities of reactive (non-working) power from the local grid.
The charges apply when these companies use industrial machinery, HVAC systems, or large electrical motors and their energy efficiency drops below a certain agreed-upon threshold.
Find out more in our guide to reactive power charges for businesses.
How can businesses reduce their DUoS charges?
Most types of DUoS charges paid by businesses are fixed and difficult to avoid without disconnecting from the local electricity grid entirely.
However, the following three steps are practical ways that businesses can reduce their DUoS charges:
Reduce red-band consumption
Unit DUoS rates are highest during weekday evenings, when demand on local electricity grids is at its peak, and cheaper outside these periods.
By adopting a multi-rate tariff, your business can benefit from variations in DUoS charges by shifting energy consumption to the cheapest period of the contract. This can be achieved by:
- Scheduling industrial operations outside of red-band hours.
- Using a commercial solar battery to provide an alternative supply during peak hours.
- Using an Energy Management System to control the timing of processes such as EV charging.
Reduce overall consumption
DUoS unit charges are paid for each kWh of electricity consumed by a business, as measured by energy meter readings.
Businesses can reduce their DUoS charges by finding ways to use electricity more efficiently. Visit our guide to improving business energy efficiency for practical tips.
Optimise Maximum Import Capacity
Capacity charges are based on the agreed Maximum Import Capacity (MIC) of your electricity connection, as set with your local DNO. These charges are levied for each unit (kVA) of capacity.
If the peak power demand at your property is consistently lower than your agreed Maximum Import Capacity, it may be worth requesting that your DNO reduce the capacity of your connection.
Find out more about this process in our Maximum Import Capacity guide.
Factors affecting business DUoS charges
DUoS charges are complex and are influenced by a wide range of factors specific to individual DUoS bands and regions.
However, our experts have summarised the three most important factors that affect DUoS charges for all businesses.
Location
Each DNO, or independent distribution network operator (IDNO), sets its own DUoS charges, as each has unique geography, electricity demand, and infrastructure costs.
This means that identical businesses in different parts of the country will pay different DUoS charges.
Voltage level
Voltage levels significantly affect DUoS charges for businesses.
Small and medium-sized businesses with low-voltage (LV) connections in Bands 1 or 2 incur lower charges. In contrast, businesses with higher-capacity three-phase power connections typically face much higher DUoS charges.
Higher-capacity connections place a greater strain on the local electricity grid and therefore bear a higher proportion of overall DUoS costs.
Supplier margin
Business electricity suppliers pay DUoS charges on behalf of their customers to the regional DNOs. Suppliers typically add a profit margin on top of the DUoS costs they incur.
The margin added to DUoS charges varies between suppliers, so finding the cheapest overall rate requires comparing prices from different providers.
Our business electricity comparison service makes this process as straightforward as possible. Our energy experts have helped thousands of companies successfully switch business energy suppliers.
The Significant Code Review (SCR) DUoS reform
Given the rapid changes in the energy industry, Ofgem launched a Significant Code Review (SCR) in November 2021 to ensure that DUoS charges help the grid adapt to the changing nature of electricity supply, in particular:
- Intermittent generation – the rapid expansion of UK wind farms and other intermittent renewables.
- Flexible consumption – an increase in the number of connections to EV chargers, data centres for AI, and local energy storage, which can provide demand flexibility to the grid.
The review may lead to changes in the way DUoS charges are structured for businesses, encouraging energy consumption patterns that help reduce overall network costs.
The SCR remains a work in progress within Ofgem and awaits further clarity regarding other reforms to the wider energy market.
DUoS charges for businesses – FAQs
Our business energy experts have answered the most frequently asked questions regarding DUoS charges for UK businesses.
Do homes and businesses pay the same DUoS charges?
No, homes and businesses do not pay the same DUoS charges. Businesses face more complex tariffs, including capacity, reactive power, and excess capacity charges, based on their higher energy usage and larger-capacity connections.
Homes typically pay simpler fixed and unit charges.
What band am I in for DUoS, and how can I check?
You can confirm your business’s DUoS band by referring to your Meter Point Administration Number (MPAN) on your business electricity bill.
The MPAN is a 21-digit number that contains data about your electricity connection.
Digits 6 to 8 of the MPAN represent the Line Loss Factor Class (LLFC). The DUoS tariff schedule on your Distribution Network Operator’s website shows the range of LLFCs for each DUoS band.
Can my DUoS band change over time?
Yes. Requesting a change to the Maximum Import Capacity of your electricity connection can affect the DUoS band allocated to your business.
It is also possible for DUoS charging boundaries to be amended as part of the annual updates to DUoS tariffs and rates, reflecting changes in the overall charging methodology.
Why don’t I see DUoS charges itemised on my bill?
Licensed energy suppliers incur a wide range of costs associated with delivering electricity to customers.
Using the British power network to supply electricity involves paying three types of network charge (DUoS, BSUoS, and TNUoS) as well as several environmental levies, such as the Renewables Obligation and the CfD levy.
If suppliers itemised each of these charges on bills, they would become too complex for the average customer to understand. As a result, most tariffs are simplified into a single fixed daily standing charge and a unit rate per kWh.
The exception is a pass-through tariff, an option available to large business energy customers.
Are DUoS charges negotiable or fixed?
DUoS charges are effectively fixed.
Each year, the regional Distribution Network Operator (DNO) publishes its DUoS tariff, which explains how charges will be levied for all domestic and non-domestic consumers connected to its network.
It would not be feasible for operators to negotiate rates individually with each consumer.
Where can I find my local DNOs published DUoS tariffs?
Each regional DNO publishes its annual DUoS tariffs as a PDF document on its website.
We recommend searching for the name of your DNO along with the phrase “Distribution Use of System Charging Statement” on Google to locate this document.
What’s the difference between standing DUoS charges and my supplier’s standing charge?
The standing charges included within the tariffs of licensed energy suppliers cover the fixed elements of DUoS, but also include additional components such as:
- Meter Operator charges
- Administrative costs, such as customer service and billing
- Profit margin
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