Support to help your business manage the new energy reforms.
In November 2019, Ofgem published a decision to reform the way consumers pay for the ongoing maintenance, operation and upgrading of the electricity grid. This process is known as the Targeted Charging Review (TCR).
Once the decision has been implemented, it will modernise the electricity network, and spread costs more fairly between businesses and consumers.
The new arrangements could generate savings of £4-£5bn by 2040.
Under the current TRIAD charging bands, the customer is able to manipulate their consumption in order to avoid some TRIAD charges at the more expensive periods of the day.
TCR will standardise charges, ensuring everyone pays their fair share to use the energy network at peak times.
Ofgem has now finalised recommendations in the charging review, and will implement fixed charges. The new charges will be introduced from April 2022, and will impact all electricity supply contracts and pricing.
How TCR will impact your business
Despite the rollout of TCR not being until April 2021, the existing TRIAD charging method will be replaced with a fixed charge from 2021. This means that customers who are currently able to reduce their usage during peak time (normally 17:00 to 19:00) will no longer receive the benefit of lower Transmission Network Use of System (TNUoS) costs from 2021 onwards.
Customers with on-site generation will also be impacted. TCR will see an end of the embedded benefits associated with exporting energy during the TRIAD periods.
Electricity meters with no agreed supply capacity will have specific charges applied based on net volume of consumption. Half hourly metering charges will vary depending on agreed capacity and voltage levels. Rates will vary for different regions.
Changes to distribution residual charges will follow in 2022.
In the meantime, Ofgem will continues to review further changes to Distribution Use of System (DUoS) and Balancing Use of System (BSUoS) charges, which are expected to be introduced in 2023.
Businesses likely to see the largest impact of these changes are energy intensive industries, using large volumes of electricity, with high voltage supplies. In some cases, securing an agreed capacity reduction or voltage reclassification will be beneficial.
Any organisations currently exporting energy during Triad periods will see a reduction in embedded benefits, which will impact businesses utilising on site generation.
The full impact proposals will be known when the Grid publish their tariff forecasts for 2021/22.
Keeping you informed
ECA Business Energy specialists will provide regular updates on important industry changes, and how they will impact your business. More will be known once the tariff rates are published early in the new year.
If you have any questions, please do not hesitate to give us a call 01246 290490 or contact us here.