The costs of balancing the grid rose much faster than expected in the first part of 2026. The National Energy System Operator (NESO) is facing a funding shortfall as a result.
The latest forecast from NESO shows that the cost of grid balancing services has increased so much that NESO could be forced to put charges up in the autumn.
Balancing services are essential for running the national grid safely and effectively. Keeping the system at the right frequency requires a very close match between the amount of electricity going in and the amount being used. Balancing services maintain the balance between generation and consumption by instructing generators to increase or decrease their output.
Why is NESO increasing BSUoS charges?
NESO recovers the cost of balancing services through a charge on your bill known as Balancing Services Use of System, or BSUoS. Normally BSUoS rates are set in advance, so businesses can budget for them.
However, it has become clear that the BSUoS tariff of £12.49/MWh originally set from October 2026 will not be enough to cover the actual cost of the balancing services required. So NESO is considering the unusual step of adjusting the agreed BSUoS charges upwards. If it goes ahead, businesses will be paying higher rates than expected from October 2026 to March 2027.
There are two reasons for the increased spending on balancing services.
- Rising wholesale energy prices – so when NESO has to ask a generator to increase output, it pays a higher market price than expected
- Increased volatility in energy markets – which means greater need for balancing services
When will balancing charges go up?
It’s not certain that NESO will break with protocol and revise the tariff from October 2026 onwards. But whatever happens, we are certain that the fixed tariff from April 2027 will be higher.
NESO has a pot of money to help with liquidity during periods of “under-recovery” (when costs aren’t fully covered by through the non-commodity charges on your bill). This extra liquidity allows it to respond more gradually rather than hiking prices at short notice. But the current situation, thanks to the Middle East conflict and other factors, is so unusual that we expect the liquidity fund to be drained by the end of the year. Hence the possibility of changing the next tariff when it’s already been set.
Regulator Ofgem is currently reviewing the way charges are recovered from customers and there is industry debate around the best way forward.
Non-commodity costs make up a significant proportion of the typical business energy bill – often more than the energy itself. Understanding these third-party charges can help you to plan for them. For more information, download our business guide to non-commodity costs for electricity and gas.
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