What is Targeted Charging Review? Explore recent results from the free NUS Triad Warning Service and learn how upcoming changes to UK energy policy may affect your business.
The UK Triad periods for November 2020 to February 2021 have now been published by the National Grid and we are pleased to confirm that the free NUS Triad Warning Service identified each of these correctly.
The published Triad periods were:
- 7 December 2020 between 5.00 pm and 5.30 pm
- 7 January 2021 between 5.30 pm and 6.00 pm
- 10 February 2021 between 6.00 pm and 6.30 pm
For those NUS clients who followed the NUS Warning Service and reduced electricity consumption and peak demands during these periods, they will find their invoiced TNUoS (Transmission Network Use of System) reconciliation charge lower than it would have been had they taken no action.
For those UK businesses who took no action, the three Triad periods may mean nothing other than to highlight that you can affect your electricity invoiced costs by reducing consumption both generally (through energy efficiency) or at specific times of the day when (depending on your type of supplier contract) you pay more for each unit of electricity you are using.
Electricity is purchased by your supplier at different prices for each half hour (HH) of the day. Your supplier contract may ‘bundle’ these prices into just one unit (kWh) price, day and night unit prices, or, more often than not, different unit prices (or a surcharge / additional unit charge) for specific times of the day.
The most common of these is the additional cost per unit raised for DUoS (Distribution Use of System) charges where (until March 2022 when some changes occur) there is an additional unit charge for different periods of the day to cover distribution costs, the most significant additional cost normally being between 4 pm and 7 pm every weekday.
What is the Targeted Charging Review (TCR)?
In the UK both the transmission (TNUoS) and distribution (DUoS) charging methods are to be changed in the next year through an Ofgem (Office of Gas and Electricity Markets) review known as the Targeted Charging Review, or TCR for short.
The main change coming through the TCR is that from April next year the three Triad charge periods (from winter 2022-2023) will no longer be used to charge for transmission costs (and likewise the 4pm to 7 pm consumption for DUoS charges for distribution costs) as these will instead be included in Fixed Charges applicable to all customers. The size of the Fixed Charge will be dependent on which ‘band’ your supply is placed within a new ‘Banding’ system. The bands have been created on the basis of the ‘Maximum Indicated Load’ required by a customer’s supply (shown as the Service Capacity on most invoices).
How can the TCR affect my business?
Energy pricing bands were set in 2020 and your supply will have been allocated to a band already (for the next four years) and only in a couple of very narrow situations can this be changed. As part of the NUS’ Analysis & Optimization service we will review the band allocation when published and identify any supply requiring, and able, to challenge its band placement.
If you are approached by any TPI (Third Party Intermediary), Energy Broker or Energy Consultant indicating that they can change your band placement ‘now’ if you ‘send them an invoice’, or even worse, sign a (often very widely drawn) letter of authority for them, you should be very careful as the statement is in itself ‘suspect’ and so may therefore be the TPI/Broker/Consultant!
For NUS clients we will be distributing additional information on the TCR changes in the future to keep our clients up to date with these events. In the meantime, should you wish to discuss ways of reducing your energy costs, carbon or sustainability footprint in the UK, the NUS’ Energy Services team are available to discuss the options suitable for your business, please contact us here.