What is TCR?
Targeted Charging Review is OFGEM’s approach to correcting the existing network inefficiencies. In order to make charges fairer, OFGEM has conducted a review of some of the non-energy costs paid by businesses to support the UK’s electricity network. These affected costs are made up of two main elements:
• The transmission charge, or TNUoS which covers the cost of getting your electricity from the power station to the distribution station in your local area.
• The distribution charge, or DUoS which covers the cost of getting your electricity through your local distribution network to your business.
Why is it happening?
Consumers had previously benefitted from load shifting, on-site generation, and utilisation of battery storage to avoid peak charges as part of the current framework. As a result of these complexities, OFGEM has proposed that the existing methods do not accurately reflect the cost of building, maintaining, and operating the network.
The variable costs associated with the residual elements of TNUoS (Transmission Network Use of System) & DUoS (Distribution Use of System) will be replaced by a fixed charge dependent on a consumer’s voltage or the agreed capacity. This has already been established with calculations taken from the last 2 years (as below).
All MPAN LLFs (Line Loss Factor) will also be altered to fit into a designated banding.
Who will be affected?
TCR will affect all final demand consumers at varying levels. Those who have previously benefitted from load shifting and those with high amounts of excess capacity will be the hardest hit.
When does it come into effect?
TCR was due to officially come into effect as of 1st April 2022. However, on 1st April 2021, OFGEM announced the start date for the transmission element of the charge will be delayed to 1st April 2023. The distribution element remains scheduled to take effect from April 2022. https://www.ofgem.gov.uk/system/files/docs/2021/04/ofgem_open_letter_on_cmp343.pdf
How will it affect customers?
Customers will no longer be able to benefit from considerable savings by load shifting to avoid periods of peak demand.
How are suppliers adapting?
Most suppliers want to make this change as easy as possible for Brokers and their customers to be able to quickly and easily identify how their quotes are impacted by TCR. To achieve this, suppliers are typically including the charges as a fixed cost within the standing charge. This is also the recommended approach by OFGEM to offer customers transparency and fairness.
What to look out for when comparing quotes
TCR impacted charges may not be included, depending on the supplier. It may therefore become more difficult to compare quotes like-for-like. Be sure to look out for the TCR impacted costs. If you have any questions about your quote, please speak to your dedicated Account Manager.
For the latest information regarding the TCR changes and important dates coming up, please refer to: https://www.ofgem.gov.uk/electricity/transmission-networks/charging/targeted-charging-review-significant-code-review