The Targeted Charging Review (TCR) is a Significant Code Review (SCR) led by Ofgem that is changing the way system and network costs are charged to UK energy consumers.
To help you understand the forthcoming changes that will be coming into play we’ve put together some handy FAQs for you to reference.
What costs are changing?
Ofgem will be changing the way the transmission and distribution network costs are charged by levying all residual charges for end consumers.
Residual charges make up the main proportion of TNUoS (Transmission Network Use of System) and roughly 50% of DUoS (Distribution Use of System), covering the costs of using the existing network. The remaining proportion of TNUoS and DUoS costs are forward-looking costs that cover the costs of network growth and expansion.
When will these changes impact UK businesses?
From 1st April 2022 the recovery of DUoS residual charges moved to the fixed charge, with the value recovered through the existing red/amber/ green rates falling significantly.
From 1st April 2023 the recovery of TNUoS residual charges will be moving to a new fixed charge, which will remove the value in Triad Avoidance.
What changes will I see on my energy quote/bill?
The price you will initially see on your quote will be an increased standing charge, depending on your product type (fixed or pass-through). The price you pay for DUoS residual costs will be a fixed charge on your bill from April 2022 and for TNUoS from April 2023, but this will vary site by site basis based on a banding structure that has been developed by National Grid.
How does the banding structure work?
For non-domestic consumers, there will be a single set of transmission residual charges, and a set of distribution residual charges for each of the 14 distribution licensed areas, for each fixed charging band.
Each site will be assigned to a band, which is be defined by a consumer’s voltage level and capacity for larger Half Hourly (HH) consumers or net consumption volume for smaller Non Half Hourly (NHH) consumers.
The band a customer is assigned to was set at the end of 2020 by the Distribution Network Operator (DNO) based on a two-year average, with these bandings now fixed until 2026.
(Submit your details below to download our TCR fact sheet and find out which band your business sites have been assigned to on page 2).
Does this mean my energy bill will go up?
Some customers could see an increase in the DUoS and TNUoS charges, some may see a decrease. At an industry level the TCR isn’t changing the total amount of money being collected under DUoS and TNUoS but the distribution of cost will.
Submit your details below to download our TCR Fact Sheet for more information, or contact us if you have any further related questions.