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Ben Brading 5 min read

Network Charging Compensation Scheme: What it covers and how it works

British businesses pay the highest electricity costs in the developed world, and network charges are a major reason why. These charges fund the operation and expansion of the British electricity grid, and they have risen significantly in recent years to support the shift from fossil fuels to renewables.

The Network Charging Compensation Scheme refunds up to 90% of these network costs to certified Energy Intensive Industries (EIIs). There are currently 550 certified EIIs, including manufacturers of steel, chemicals, glass and cement.

Here’s what we cover in this guide to the Network Charging Compensation Scheme:

What is the Network Charging Compensation (NCC) Scheme?

The Network Charging Compensation (NCC) Scheme is a UK government scheme that refunds eligible energy-intensive manufacturers for a portion of the network charges they pay on their electricity bills.

It is one of three measures within the British Industry Supercharger package and is administered by Elexon on behalf of the Department for Business and Trade.

Rather than removing network charges from bills directly, the scheme works as a monthly refund. Eligible businesses pay their TNUoS, DUoS and BSUoS charges as normal, then claim back 90% of these from Elexon.

Why the Network Charging Compensation Scheme was introduced

The NCC Scheme is the mechanism by which certified participants in the British Industry Supercharger can claim back a proportion of the network charges paid on their electricity bills.

In the retail energy market, regulated network charges set by Ofgem are passed on by distribution and network operators to licensed electricity suppliers, based on their customers’ usage and location.

The NCC Scheme was introduced because there was no simple way to integrate an exemption for certified EIIs without reducing the regulated revenue of the network operators.

The NCC Scheme enables certified EIIs to pay these costs as normal on their business electricity bills, and then reclaim them later from Elexon, the market operator.

Who qualifies for the Network Charging Compensation Scheme?

Only a small group of businesses classified as Energy Intensive Industries qualify to receive network charging compensation.

The eligibility criteria for EIIs are set by the Department for Business and Trade as part of the British Industry Supercharger policy. Broadly, the eligibility criteria are:

  • Sector level test: The business must manufacture a product that requires significant business energy consumption and is subject to international competition. The Department for Business and Trade specifies which products meet this definition.
  • Business level test: Electricity costs must be at least 20% of the cost of manufacturing the product, excluding staff costs.

Find out more in our full guide to the British Industry Supercharger.

What electricity charges are covered by the NCC Scheme?

The Network Charging Compensation Scheme specifically lowers the costs associated with operating, maintaining and expanding the national grid in Britain.

Here, we explain the three components of network costs covered by the NCC:

BSUoS charges

Balancing Services Use of System charges are paid to NESO, the electricity grid operator.

NESO is responsible for ensuring that supply and demand are always finely balanced on the grid to avoid blackouts and equipment failure. It achieves this through activities such as:

BSUoS charges are paid by all domestic and business users of grid electricity on a per-unit-consumed basis. Find out more in our guide to balancing services use of system charges.

TNUoS charges

Transmission Network Use of System charges are regulated charges paid to transmission network operators in Great Britain.

The transmission network is the nationwide high-voltage network that connects large-scale generators, such as nuclear power stations and gas power stations, to regional electricity distribution networks.

TNUoS charges are paid as a domestic or business electricity standing charge at all properties that have a connection to the grid.

Find out more in our guide to transmission network use of system charges.

DUoS charges

Distribution Use of System charges are regulated charges paid to distribution network operators (DNOs) in Great Britain.

The DNOs operate and maintain lower-voltage electricity networks that receive power from the transmission network and deliver it to homes and businesses in their region.

DUoS charges are calculated based on a return-on-asset-based calculation made by Ofgem, which assesses each DNO’s ongoing investment in distribution assets such as overhead cables and substations.

The DUoS charges paid by electricity users depend on the regional DNO network to which their property is connected.

Find out more in our guide to distribution use of system charges.

How the Network Charging Compensation Scheme works

The following step-by-step guide explains how certified Energy Intensive Industries receive Network Charging Compensation.

1. Network costs are paid as normal through electricity bills

Eligible EIIs, like all other businesses, pay for power from the grid through a tariff with licensed business energy suppliers.

These larger businesses typically use a pass-through or flexible energy contract, where the network costs incurred by the supplier are passed through as a separate item on electricity bills.

Certified EIIs pay these network costs as normal.

2. Quarterly claims through the Elexon portal

Every quarter, the certified EII must make a claim through Elexon’s NCC Portal.

The claim involves submitting all business electricity bills associated with each MPAN that is directly used in manufacturing the eligible products.

For multi-purpose electricity connections, sub-metering data may be submitted to calculate the consumption directly relating to the manufacturing of the eligible product.

Claims can only be made for high-capacity connections with half-hourly electricity meters.

3. Monthly compensation payments

Elexon reviews each submission for eligibility. Once accepted, Elexon processes monthly payments, which are made 12 months after the period in which the costs were incurred.

The compensation payments are calculated as 90% of the network costs incurred. The delay in the monthly payments is designed so that Elexon can fund the NCC in advance by collecting the EII support levy from all licensed electricity suppliers.

How much compensation do businesses receive under the NCC Scheme?

Certified EIIs currently receive 90% compensation for network costs incurred.

The Network Charging Compensation Scheme was first launched on 1 April 2024, when participants received 60% compensation under the scheme.

From 1 April 2026, this compensation percentage was increased to 90%.

Elexon publishes the total compensation due under the NCC Scheme based on the accepted returns from participants. These figures are published six months in arrears on Elexon’s Estimated Levy Fund page.

In 2025, the average total monthly network charging compensation was approximately £20m. This is expected to increase significantly from 1 April 2026, due to the government’s decision to increase the NCC to 90% of network costs incurred.

How is the NCC Scheme funded?

Elexon funds the network charging compensation through the EII support levy on licensed electricity suppliers.

Each licensed electricity supplier contributes to the scheme’s funding based on the market share of their customers’ electricity consumption.

For example, if SSE business energy’s customers make up 5% of the overall non-EII electricity consumption on the grid, SSE will pay 5% of the NCC’s overall compensation payments.

Each supplier passes on the cost of the EII support levy to all non-EII customers through unit domestic and business electricity prices per kWh.

Find out more in our full guide to the EII support levy.

How do I apply for the Network Charging Compensation Scheme?

Applying to the Network Charging Compensation Scheme requires the following two steps:

1. Apply for an EII certificate with the Department of Business and Trade

The first step is to make an application under the British Industry Supercharger, the umbrella scheme that encompasses the NCC.

The application involves submitting a form and supporting documents to the Department for Business and Trade.

Visit our British Industry Supercharger page for a detailed breakdown of the BIS application process.

Successful applications receive an EII certificate.

2. Register on Elexon’s NCC portal

Once they hold a valid EII Certificate, EIIs can register for NCC rebates on Elexon’s online portal.

The registration process includes setting up business and bank account details to enable the receipt of NCC payments.

Who administers the Network Charging Compensation Scheme?

Elexon administers the Network Charging Compensation Scheme on behalf of the Department for Business and Trade, which sets the rules.

Elexon has been appointed as the scheme administrator because it already performs a vital role in the wholesale electricity market by calculating all payments between suppliers and generators.

Elexon’s administration role for the NCC includes:

  • Running the NCC Portal, where EIIs register and submit claims.
  • Reviewing and validating quarterly applications against EII Certificates and supporting evidence.
  • Calculating and disbursing monthly payments to eligible EIIs.
  • Invoicing licensed electricity suppliers for the EII Support Levy that funds the scheme.
  • Publishing the NCC Payment Schedule and Estimated Levy Fund figures.
  • Handling disputes and corrections.

Find out more in our full guide to what does Elexon do?

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