Standing charges are increasing
What was the Target Charging Review (TCR)?
A the end of 2019, Ofgem reformed the way Distribution and Transmission networks are now allowed to collect their revenue by moving most of the collection from consumption based rates to a fixed unavoidable £/day charge in a move to make charging fairer to all consumers.
These charges are allocated to final demand users via a banding which is determined by the consumers size and implied cost associated to the network.
The combination of both changes will make a noticeable difference on your bill from April 2022 and more so from April 2023 onwards. (Different visibilities of these changes will depend on your product)
April 2022 - Distribution Charge (DUoS) implementation
The Targeted Charging Review reform was implemented to Distribution (DUoS) charges in April 2022. All published and future distribution tariffs charged to consumers are now inclusive of the increased costs allocated to fixed £/day standing charges.
Future charging is now likely to see an increasing proportion of cost associated to this fixed £/day charge and less so from the traditional behaviour type charge such as red, amber, and green unit rates.
April 2023 - Transmission (TNUoS) Charge implementation
The April 2023 TCR transmission charge introduction will radically change the way revenue is collected compared to previous years.
Depending on location, 90 - 100% of cost will be charged via a new fixed £/day transmission standing charge rather than the traditional consumption units such as Triad (Half hourly) and peak consumption (Non half hourly).
Some regions will maintain an element of locational consumption-based charging however this will be at a much smaller magnitude (1-10%) compared to pre-April 2023 levels.
The new TNUoS TCR cost element will be included in the Standing charge (Fixed) or will be a separate fixed daily charge on the invoice (Pass-through).
How will this effect Pass-through Non-commodity billing?
Transmission (TNUoS) charging
New Targeted Charging Review TNUoS Fixed charge (£/day)
As of April 2023, a new Transmission charge fixed £/day element will be introduced to the passthrough invoice. This will collect the National Grid published TNUoS charge and is not subject to reconciliation.
Existing Transmission Charge estimate (£/day) - Reprice:
If your passthrough contract was priced after April 2021: No change, the original costs will be accurate.
If your passthrough contract was priced before April 2021: The transmission element for each MPAN will be repriced as of April 2023 and will reflect the new Triad estimate costs associated with the post TCR locational charges.
These charges will vary depending on location but will range between 0 and 10% of existing pre-TCR costs and will be designed to accurately reflect the winter Triad costs in the contract to avoid any over-collection.
The transmission estimate element will continue to be reconciled annually once the official Triad periods are known.
Distribution (DUoS) Charging
No change to the structure or method of billing, the invoice will continue to passthrough the published rates for Distribution charging.
How will this affect contracts with fixed or fixed-annual non-commodity?
There will be no change to the way you are billed from 1st April 2023.