The Targeted Charging Review (TCR) is an Ofgem led project and it represents a radical change in the way business are charged for transmission and distribution costs. It assesses how residual network charges, which recover sunk or fixed costs of the network companies, should be set and recovered. The impact of this change will depend upon customer’s circumstances and usage behavior.
Changes in charging methodology will be implemented in two stages. Distribution Network Use of System (DuoS) changes that result from the TCR will come into force in 2022, whereas changes to the charging methods for Transmission Network Use of System (TNUoS) will come into play from 2023.
Distribution (DUoS) charges based on customer’s consumption (Red, Amber, Green) should have significantly reduced rates. The idea is to fix as much as possible, so the charges do not depend on consumption, but on capacity. Therefore, Standing Charge and Capacity Charge rates will be increased based on customer’s voltage, but Red, Amber and Green rates will be lower then before.
TNUoS (TRIAD) Charges should also become mostly fixed charge, but will now have two components, fixed and variable. National Grid will publish fixed rates which are based on client’s voltage and maximum capacity or consumption. The charging methodology for Fixed TNUoS charge will be similar to distribution standing charge. Depending on the supplier, this charge might appear as a separate line on the invoice. The variable portion of the TRIAD charge will remain unchanged. However, it will be reduced based on location (transmission zone), where certain zones might come down to 0. The charging method for the variable element will remain unchanged as well and should appear as Location Variable TNUoS on invoices.
Customers who previously managed to avoid TRIAD, either by having naturally low consumption during peak hours or by employing load shifting, are likely to see a significant increase in costs because they will now be charged at a flat rate (Residual Fixed TNUoS). Customers who were highly affected by TRIAD before because they were unable to avoid consumption in during peak hours may see a reduction in cost, especially if they have a smaller connection size which puts them into a lower charging band.
Sites will be allocated a charging band based on the average maximum import capacity/consumption from a historic 24-month period.