As of 1st April 2023, there wil be two major changes to the way balancing costs are shared and billed to suppliers and consumers.
Exemption of generation
The implementation of Ofgem and National Grid's change (CMP308) to remove transmission connected generation from the total volume used to socialise network balancing costs, collecting solely from final demand consumers (CMP308). This will inevitably increase Balancing Services Use of System (BSUoS) costs for final suppliers and demand consumers.
New BSUoS Fixed Tariff
As of April 2023, National Grid will implement an additional change to the way BSUoS is calculated and settled by fixing the price in advance for a set period.
Currently the BSUoS price is calculated by determining each half hours outturn of balancing costs divided by the half hour's chargeable volume. This gives a different £/MWh price for each half hour. With recent upward spiral of balancing costs this has resulted in extremely volatile and unpredictable prices.
To help mitigate the inherent volatility and added burden on demand users National Grid is now required to publish a flat £/MWh BSUoS price 9 months in advance for it to be fixed out for 6 months.
As the change was confirmed December 2022, National Grid Published two fixed BSUoS prices effective from April 2023 and October 2023.
The BSUoS fixed 6-month price for April to September 2024 is due to be published by the end of June 2023.
Ref: National Grid - BSUoS FIxed Tariff 2023-24
As these are estimated volumes and costs it is likely that any under or over collection of revenue will pass into future published rates as corrections.
National Grid have raised a further possible change to reduce the notice period for setting the fixed BSUoS tariff down from 9 months to 3 months.
Could the Fixed BSUoS price change mid-term?
It is uncertain however we predict that if there is an exceptional event where BSUoS costs exceed National Grid's working capital the BSUoS price coule be changed mid-term to prevent cash flow issues due to excess under collection.
How will this effect Pass-through Non-Commodity?
As of April 2023, we will be able to pass through the fixed BSUoS price published by National Grid giving consumers certainty of BSUoS costs. As a result, the estimated BSUoS contract rate will be updated to reflect the actual BSUoS rate for each fixed period. Furthermore, contracts with pass through non-commodity, which will not be subject to BSUoS reconciliation from April 23 onwards.
Please note, BSUoS reconciliations will still be applied to the bills for a few months after April billing as we will run an overall reconciliation to ensure that all the schedules ending prior to 1st April 2023 have been applied.
How will this effect contracts with fixed or fixed-annual non-commodity?
There will be no change to the way you are billed from 1st April 2023.
For more information on BSUoS below.