In April 2022 a new charging structure will be implemented following a review by the industry regulator, Ofgem. This process is called the Targeted Charging Review and it will be implemented in stages.
Back in August 2017, a Significant Code Review (SCR) was launched and its primary objective was to determine if the current charging framework was inefficient and was unfairly penalising energy users. The Targeted Charging Review by Ofgem aims to provide fairness, reduce distortions and consider the ‘Embedded Benefits’ for smaller and larger generators.
We explore what this will mean for your organisation.
What’s Changing With TCR?
Ofgem has decided that residual costs, from April 2022, will be levied with fixed charges for businesses, as well as households. There will also be changes to the ‘Embedded Benefits’ received by Smaller Distributed Generators.
The major changes will impact on the transmission (TNUoS) and distribution (DUoS) charges that you will see on your bill. The charges will be divided in two – residual charges and forward-looking. The residual charge covers the cost of maintaining the network. The forward-looking charge is for expanding the network.
The change means that every business will pay a fixed cost to maintain the network and the amount will be determined based on their customer’s site. The charging bands which are set are based on your voltage type, measurement class (half hourly / non half hourly) and annual usage.
What Are The Stages?
The agreed implementation and important dates of the Targeted Charging Review are
April 2022: Residual charges for the network (DUoS) will change
April 2023: TNUoS charges for the network will change
Will TCR Charges impact my current contractual arrangements and prices?
It is possible that your current agreement will be impacted, however it will depend on your circumstances. Factors such as the structure, supplier and the terms and conditions of the contract you agreed will need to be assessed.
At eyebright, we can assess your exposure – if there is any – and advise you accordingly on the options available to you.
Could My Business Energy Costs Increase?
The impact of the TCR change means that many businesses will pay more for their energy. Transmission Generation Residual embedded benefit (Triads) are to be removed in April 2022 also, so if you self-generate or currently load shift, then you could see your price increase.
It’s anticipated that most SMEs will be on a low voltage charging band.
To better understand how your organisation will be impacted by the changes, please get in touch and speak to our experienced consultants.