Ofgem Targeted Charging Review (TCR)
Designed to make UK energy network charges fairer for all consumers, Ofgem’s Targeted Charging Review (TCR) may change how your business pays for electricity going forward. Full details of these changes and how Networks will apply them to Use of System (UoS) charges are still being finalised, but here’s what we know to date.
What is the Ofgem TCR?
Large energy consumers who have found ways to avoid paying their fair share of Grid charges has resulted in inflated costs for other Network users. Through the Targeted Charging Review, Ofgem have announced changes to Use of System (UoS) charges to address this.
What are UoS charges?
UoS charges are how the Networks across the country recover their costs. Namely, these are Balancing Services Use of System(BSUoS), Distribution Use of System (DUoS), and Transmission Network Use of System (TNUoS) charges. Together these equate to around one third of a consumer’s total energy costs.
Why is a change required?
Historically, UoS charges have been applied as a pence per kWh figure that comes into effect at particular times of the day or year. For extremely high electricity consumers there was significant financial benefit in reducing electricity demand during these times to lessen the overall cost.
As DUoS management and TNUoS avoidance became more common, Networks saw a significant reduction in income. This shortfall resulted in higher costs for all consumers – including those who had not actively avoided the charges.
What are the changes?
In response to this, Ofgem have re-organised charges so that the bulk are paid as a fixed-fee-per-site, per-day. Each consumer will be allocated a band (based on historical KVA values averaging over 24 months), with higher KVA sites paying a higher charge. This, they hope, will make the charges unavoidable and ensure that consumers are paying “their fair share” of network costs.
When will the TCR changes take effect?
The Targeted Charging Review changes are being phased into effect over 12-months, with TNUoS being charged this new way from April 2021 and DUoS from April 2022.
What is the effect of the TCR likely to be?
Once the Targeted Charging Review is implemented, the most prominent change is likely to be a noticeably larger standing charge for all consumers.
How can Enexus Energy help me with the TCR?
The team of energy experts at Enexus can conduct a thorough KVA review of your business energy accounts to ensure that you are in the lowest band possible, and therefore paying as little as possible towards the TCR. If we identify areas of opportunity, we will assist with any KVA reduction that may be required to bring you down to those lower bands and help you save money on your business energy.
Whether you’re an existing customer or just looking for advice, we are happy to answer any questions you may have about the the Targeted Charging Review or how it will affect your account. Just get in touch with the team at Enexus.