BSUoS is a charge paid by electricity consumers to cover the costs of balancing the supply and demand of electricity in the national grid.
This guide explains what it is, who is liable for paying it, how charges are calculated, and how they are paid through electricity bills.
What is BSUoS?
BSUoS (Balancing Services Use of System) is a charge paid by electricity consumers through their electricity bills that covers the day-to-day operation of balancing the national electricity transmission system.
It is a unit charge (pence per kilowatt-hour), fixed in advance by the National Energy System Operator (NESO), based on the estimated costs of matching electricity generation with demand across Britain.
BSUoS charges make up approximately 3% of total business electricity prices.
Who pays BSUoS charges?
All electricity consumers in Britain pay BSUoS charges as part of their electricity bills.
The charge is collected by either the domestic or business energy supplier, who then pays the aggregated amount back to NESO.
It is a unit charge (in p/kWh or £/MWh for large consumers), meaning the total amount each business pays depends on their electricity consumption.
This model has been in place since April 2023 following two industry code modifications:
- CMP308: Removed generators from the charge.
- CMP361: Introduced the fixed tariff.
BSUoS before April 2023
Before April 2023, BSUoS charges differed in two ways:
- They applied to both electricity generators and consumers.
- The BSUoS unit rate changed every day to reflect NESO’s day-by-day costs, instead of being fixed in advance for a 6-month period.
The reasoning behind these changes was to allow British generators to compete in Europe and to reduce the uncertainty premium faced by consumers.
European markets have long levied grid balancing costs onto consumers, so these changes reduced the costs faced by British generators, allowing them to compete and export wholesale electricity over the electricity interconnectors that criss-cross the channel.
The move to a fixed tariff also helped remove the extra risk premium that electricity suppliers charged customers as a safeguard against variable NESO costs, effectively reducing the overall charge.
How are BSUoS charges calculated?
The BSuoS charge is paid by a business at each billing period and is calculated as follows:
BSuoS charge = Electricity consumption (MWh) x BSUoS tariff (£/MWh)
The BSUoS fixed tariff (£/MWh)
The BSUoS tariff is set by NESO and published in advance using forecasts. It is a fixed amount set for each of the two charging periods: Summer (April to September) and Winter (October to March).
The table below shows the most recent fixed tariff rates.
Swipe the table horizontally to see all columns on a mobile device.
Source: NESO
Example BSUoS charge calculation
As a fixed unit rate, the BSUoS charge the business pays depends on its electricity consumption. Rates are expressed in pounds per megawatt hour (£/MWh), or as pence per kilowatt hour (p/kWh) for smaller volumes. Since 1 MWh equals 1,000 kWh, a tariff of £13.74/MWh is equivalent to 1.37p per kWh.
For example, an energy-intensive industrial customer using 2 GWh of electricity across a charging year consumes 2,000 MWh. At a tariff of £13.74/MWh, that produces a BSUoS charge of £27,480.
How do BSUoS charges appear on business electricity bills?
How BSUoS appears on a business electricity bill depends on the type of contract a business is on.
Fixed contracts
Typical customer: Smaller, lower-usage businesses.
On a fixed energy contract, BSUoS is built into the unit rate. This gives a business one all-in unit rate for its electricity, and the BSUoS charge does not appear as a separate item on the bill. Because these contracts are usually fixed for one, two or three years, the supplier has to forecast future BSUoS tariffs and add a risk premium to cover any increases.
Pass-through contracts
Typical customer: Larger premises with a half-hourly meter.
On a pass-through contract, BSUoS is presented separately from the wholesale energy cost. The business pays the actual BSUoS charge as its own line item, alongside other non-commodity costs such as DUoS and TNUoS.
This gives more visibility over what is being paid and why, but it also means the BSUoS cost sits outside the fixed portion of the contract.
Can businesses reduce BSUoS charges?
The total BSUoS charge is equal to the electricity consumption multiplied by a fixed unit rate set by NESO that cannot be negotiated, which leaves businesses with two practical levers:
- Reduce consumption: BSUoS is charged per unit of electricity, so using less means paying less.
- Check the supplier margin: Suppliers typically add a margin on top of the actual BSUoS cost, so costs can be reduced by finding a competitive tariff.
Our experts have supported over 5,000 businesses to find a competitive tariff. Compare business electricity prices today.
BSUoS charges FAQs
Our business electricity experts answer commonly asked questions regarding Balancing Services Use of System (BSUoS) charges.
Does BSUoS apply to gas?
No. BSUoS is an electricity-only charge, because it covers the cost of balancing the electricity transmission system. Gas network balancing is managed separately under its own arrangements.
Are BSUoS charges subject to VAT?
Yes. BSUoS is part of the electricity bill, so it is subject to VAT like the rest of the bill, where most businesses pay VAT at the standard 20% rate. Find out more in our guide to VAT on business energy bills.
Can a supplier change how BSUoS is treated during an electricity contract?
No, how BSUoS is billed is set by the contract terms, so a supplier typically cannot change the treatment partway through the tariff.
Where can businesses find the latest BSUoS tariff?
NESO publishes the fixed BSUoS tariffs in advance on its website, ahead of each charging period.
What happens if actual balancing costs are higher than the BSUoS tariff recovers?
The BSUoS tariff is fixed in advance, but it is not always guaranteed for the full period. NESO builds in a level of headroom to absorb costs that come in higher than forecast. If that headroom is used up during a charging period, Ofgem can allow NESO to reset the tariff mid-period, meaning the rate rises before the period ends.
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