Ofgem’s Targeted Charging Review
What is it?
Ofgem (the energy regulator) has reviewed the way that electricity bills are calculated as part of their Target Charging Review (TCR). This has changed the way customers’ electricity charges are billed.
What exactly is the change?
Electricity customers have traditionally paid a unit rate for usage. This incorporates certain costs to help pay for the maintenance and improvement of the network. This has included the cost of the transmission (TNUoS) and distribution (DUoS) of electricity.
These costs are split into two charges: residual charges (the cost of moving electricity through pylons and cables) and forward-looking charges (the cost of improving the network).
The residual charges were previously built into the unit rate, but higher users of electricity were paying a greater proportion of the overall cost. As part of Ofgem’s review, it was decided that residual charges should be applied to standing charges instead – to increase fairness.
The TCR changes came into effect for DUoS from 1 April 2022, and for TNUoS this will be effective from April 2023.
What does this mean for you?
Once your site has been allocated to us, you will be entered on to our system and placed on the default tariff. From here, we are then able to discuss your business water needs to find the best deal for your contract with us.
Your business will be placed into a band (see below) according to how much electricity you consume. This will determine the amount you pay for TNUoS and DUoS costs. At the point of sale/renewal, your quote may look slightly different to what you‘re used to. Your standing charge will increase, but you’ll pay a slightly lower unit rate.
If there’s no significant change in your consumption, there’s unlikely to be any significant impact to your bill.
If you entered into a contract before 9 May 2022, there will be no change to the prices you agreed at the point of sale. These were confirmed in the contract we sent to you. When your contract expires, you’ll be offered a renewal price which will incorporate the changes being introduced.
The National Grid has developed the new banding system. All energy providers must use when calculating the standing charge for customers. The new bandings can be seen in the table below: