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How will the Targeted Charging Review (TCR) affect your business?

Before we go into what the Targeted Charging Review (TCR) is, here’s a quick explanation of what transmission and distribution charges cover:

Transmission Network Use of System (TNUoS) charges recover the cost of providing and maintaining the transportation of electricity to your business.

Balancing Services Use of System (BSUoS) charges relate to the costs of the day-to-day operation of the transmission system – controlling the amount of energy in the system.

Distribution Use of System (DUoS) charges recover the cost of installing and maintaining the local distribution networks.

Why is TCR being implemented?

Ofgem is implementing TCR to create a fairer energy network and spread the cost across all energy users. The current system allows users to adjust operations at peak times to avoid transmission and distribution charges, leaving others to pay the balance.

So what’s changing?

From April 2021, BSUoS will be charged based on gross demand and will remove the benefit to businesses with on-site generation.

From April 2022, DUoS will be charged as a fixed (£/day) method, instead of the current (p/kWh) method. Charges will depend on if you have Half Hourly (HH) or Non Half Hourly (NHH) meters.

From April 2023, TNUoS will be charged as a fixed (£/day) cost for all demand customers instead of the current billing method of (£/MW) for HH metered usage, and (p/kWh) for peak consumption (4pm-7pm) for NHH metered usage.

What does this mean for businesses?

  • All businesses will be allocated a charging band based on their consumption, determining their charging threshold.

  • If you have a Triad avoidance strategy in place – reducing your consumption at peak times – this will no longer help avoid DUoS and TNUoS charges.

  • If you have on-site generation, you’ll no longer benefit from exporting on-site generated electricity during Triad periods (peak times).

  • All businesses will either see an increase or decrease in their total energy bill.

Charging Bands – something to consider after being placed in your band…

If your business is at the lower end of the charging band then you are likely to pay more for the fixed charges, compared to a high consumer in your bracket.

And if you’re a high electricity consumer compared to your charging band’s average, you’re likely to pay less in fixed charges when compared to a low consumer in your bracket.

The important thing is knowing where your business stands as TCR continues to be rolled out.

Two Real Life Examples

After conducting a TCR review, one of our clients was expecting an annual increase of £40,000 – a large sum to allocate additional budget for each year. But it’s not all negative, things can be done to minimise or even greatly improve the outcome. By reviewing their procurement strategy and working with our Energy Projects team the client is now expecting an annual saving of £86,000, so that’s a £126,000 per year swing in costs!

And it’s not all about increases. After conducting a TCR Impact Report, one multi-site client will see a saving of £12,000 per meter per year – without having to make any changes to their energy consumption or procurement strategy.

The important thing is knowing where your business stands as TCR continues to be rolled out. To uncover how your business is affected by the TCR, request a TCR Impact Review, fill out your details below to start the process and receive a complimentary TCR Impact Report from our team of experts.

  • Author: Robyn Miller, Marketing Manager

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