Posted on: 20/03/2020
As a follow up to our latest Non-Commodity Costs webinar, Strategic Account Manager, Mark Cox outlines the upcoming changes to Transmission Network Use of System (TNUoS) Charges as a result of Ofgem’s Targeted Charging Review (TCR).
On Tuesday’s webinar, we received an unusually high number of questions relating to the TCR and the impacts it is set to have on business users. Whilst the full details are still yet to be worked out by the regulator, we can at last give you an early signpost towards where things are going.
The best place to start would be with Triad management. Changes under the TCR effective from April 2021 mean that the upcoming winter (2020/21) will be the last chance for end users to lower their demand during Triad periods and therefore reduce their exposure to TNUoS costs. This is because the current charging mechanism bases its calculations on how much power users are drawing from the network at peak times (Triad periods).
From April 2021, this mechanism is going to change. Ofgem say that the ability of large users to reduce demand at peak, shifts higher costs on to end users who don’t have the ability to sizeably reduce their demand. By making the proposed changes, Ofgem claims consumers will save money.
So how is this to be done?
Instead of measuring consumption at peak times, Ofgem will be introducing a fixed capacity charge for smaller end users, and capacity-based charging for larger end users. This will be achieved by moving the residual element of TNUoS from demand to a fixed charge based on a site’s available capacity, or recent annual demand.
To make this more reflective of usage, Ofgem has come up with a banding system. The details of this are not yet known, but we do know that businesses will fall into one of four bands based on site capacity and voltage connection. In essence, the higher your site’s capacity, the higher the pricing band you’ll be in and the higher the fixed/capacity charge you’ll pay.
Overall then, the message to takeaway is this: Triads will still be the same this winter, so make sure you’re signed up to our Triad alert service and continuing to make cost savings where you can.
Moving forwards, TNUoS charges will change, but we’ll be sure to keep you in the loop with banding categories when they’re announced so you can get a forward view of estimated costs and build them into your business planning.