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The April 2026 business energy cost shock: what UK SMEs need to know

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If you have been watching wholesale gas prices and assuming your next business energy bill is about to fall, you are in for a surprise. Most UK SMEs will see their April 2026 bills go up. Not because the wholesale price of electricity is rising, but because of changes to the parts of your bill you have probably never paid much attention to.

 

Here is what is happening, in plain English, and what you can do about it before your next renewal.

Wholesale prices are flat — so why are bills going up?

Roughly two-thirds of a typical UK business electricity bill is not the electricity itself. It is everything around it: the cost of running the national grid, your local distribution network, the policy levies that fund renewables and new nuclear, the Climate Change Levy, your supplier's margin, and VAT.

 

The industry calls these "non-commodity costs." They are set by Ofgem and the network operators, not by your supplier. And from April 2026, three of them go up at once.

What is changing on your bill in April 2026

Transmission charges (TNUoS) are the headline. This is what you pay towards the high-voltage network that moves electricity from where it is generated to where it is used. April 2026 is the start of Ofgem's RIIO-ET3 price control, which allows National Grid to recover significantly more revenue to expand and maintain the network. The fixed portion of TNUoS that lands on most business sites is forecast to roughly double in 2026/27, with further increases scheduled across the remainder of the decade.

 

The Capacity Market levy is doubling too. This is the charge that pays generators to be available during peak demand. It is forecast to roughly double between this year and next, reflecting the cost of keeping back-up capacity online as more renewables come onto the grid.

 

The Nuclear RAB (Sizewell C) levy has been on bills since December 2025. It started at a few pounds per megawatt-hour and is set to rise as construction progresses. It is small in isolation, but it is one more permanent line on the bill that did not exist before.

 

Finally, the rebate for Energy Intensive Industries (EII) has been raised from 60% to 90% of network costs. That relief has to be recovered from somewhere — and it lands on the bills of non-EII businesses, which means most SMEs.

 

Put all of that together and the market consensus among UK analysts is that typical SME delivered electricity rates will rise 5–10% in 2026/27, even with wholesale prices roughly flat. For a small business using 50,000 kWh annually at around 27p per kWh, that is the difference between paying £13,500 and £14,500–£15,000 — before any wholesale movement at all.

Three things every SME should do this quarter

You cannot opt out of TNUoS or the nuclear levy. But you can reduce your exposure.

 

First, check your capacity band. Every site is assigned a network capacity band based on historical usage. If you have downsized, cut hours, moved to hybrid working or rationalised premises since the band was last set, you may be paying for capacity you no longer use. A review can save thousands without changing anything else.

 

Second, look at when you use electricity. Distribution charges are heaviest during weekday peak hours — roughly 4pm to 7pm. If any part of your operation can shift outside those hours, the saving on delivered cost is real and recurring.

 

Third, time your renewal carefully. Suppliers are pricing the April 2026 increases very differently right now. Some have already loaded them into their quotes. Others are quoting lower rates and will pass the costs through later as variable elements. Sign the wrong contract this quarter and you could lock yourself into the worst of both worlds.

Talk to Utilities Group before your next renewal

This is the kind of detail that should be on every SME's radar but rarely is — because the increases are buried in a single line on a supplier quote. At Utilities Group we read the whole quote, including the non-commodity treatment, and tell you what you are actually signing up to.

 

If your contract is due to renew in the next nine months, get in touch before you accept anything. We will review your current usage, your capacity band, and the live market — and recommend the contract structure that protects you from the April 2026 cliff.

 

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