Non-commodity costs: the part of the price retailers get wrong

Non-commodity costs are every part of an electricity price that isn't the wholesale energy itself. In the UK, that means network charges for transmission and distribution, balancing costs, and government policy costs. For business customers they make up a large share of the price, and they vary far more from site to site than the energy does.

Why a flat uplift doesn't work

Many retailers still add non-commodity costs to a quote as a flat rate per MWh. It is quick, but it treats every site as if it were average.

In practice, the charges depend on where a site connects to the network, how big its connection is, and when it uses power. Two customers with the same annual usage can carry very different network costs. A flat uplift overcharges one, which loses the deal, and undercharges the other, which wins the deal and then loses money on it for the length of the contract.

These charges also change every year as network companies and the regulator reset them. Pricing teams are already looking for 2026 forecasts. A pricing model that can't update quickly ends up quoting against last year's numbers.

How to price them accurately

The answer is to calculate non-commodity costs for each site, using its location, connection and usage profile, and to update the rates as soon as they change.

How Factor prices non-commodity costs

Factor is a forecasting-led pricing engine for energy retailers, gentailers and C&I energy businesses. It prices live contracts for customers in two markets, the UK and Australia, and is part of Gentrack. Factor was built by people who priced energy before they built software, so non-commodity costs are built into the pricing run rather than added at the end.

• Charges calculated for every site. Factor allocates BSUoS, TNUoS and DUoS at the service-point level, then bundles multi-site customers into one quote without losing that detail.
• Energy and charges in one run. Load profiles, forward curves and non-commodity costs are calculated together. A full forecast-to-price run takes about 10 seconds.
• Margin visible by connection. Factor shows live margin connection by connection, so an undercharged site shows up before it costs money, not at settlement.
• Commercial rules applied automatically. Margin requirements and pricing rules are applied consistently across customer segments. That makes mid-market accounts worth quoting properly instead of giving them a standard product.
• Every number traceable. Each price can be traced back to the rates, forecasts and rules behind it, which matters when charges are reset and a customer asks why their price changed.
• Fits the systems you already use. Factor is API-first and connects to CRMs, billing systems and data platforms, including a managed package for Salesforce Energy & Utilities Cloud.

Many teams are live in two to four weeks, with full support from the Factor team through setup and beyond. Factor has three subscription tiers, so you can start with one use case and add more when you're ready.

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