What to expect

Targeted Charging Review

What's happening?

Modernising the national grid

Ofgem confirmed they will continue with residual charge reforms under the Targeted Charging Review.  This is to modernise the national grids electricity network as well as spreading costs more fairly between consumers.

What are the benefits?

The National Grid claim that as much as £300 million will be saved per year as of 2021. This modernisation will ultimately benefit our economy, and will have a direct impact on the UK moving toward a brighter, greener future.

What are the drawbacks?

This will be an extremely large and costly project as it expands across the nation. This means that someone has to cover the cost and it’s expected that end consumers will take on a large proportion as energy prices are expected to increase quite rapidly.

Anyone who currently has triad-avoidance measures in place will also see large cost increases. Additionally, embedded generators will see further reductions in benefits which will again cause price increases for those with these measures in place.

Changing of the triad system.

What are the changes?

As of 2021, the existing triad system will be replaced with a fixed charge methodology. Many large energy consumers had hoped this would come at a later date however, this is not the case. Ofgem was under significant pressure delay changes until 2023 but they decided that there was a legal duty to implement any cost savings at the earliest opportunity.

Consumers who reduce imported electricity during Triad periods will no-longer be able to avoid paying Transmission Network Use of System (TNUoS) charges from 2021.

Organisations who export during Triad periods with on-site generation will no longer receive benefits. These benefit withdrawals have already been happening in the North of England and Scotland.

Charging bands will be based on net volumes of consumption for those with no agreed capacity. Half-hourly metering charges will differ depending on the agreed capacity and voltage level. The region of the site will also affect prices.

Changing of the triad system.

What does it mean for businesses?

Businesses with high baseload, high voltage connections and no current Triad avoidance will expect to see a cost reduction. Securing an agreed capacity reduction or voltage reclassification could be beneficial in some cases.

The worst affected businesses are more than likey going to be those with Triad-avoidance measures in place – This is because these measures will no longer cause a cost reduction under the new scheme.

Organisations utilising wind or CHP during Triad periods will lose all embedded benefits. Solar will be slightly less impacted as Triad periods fall during the dark hours as solar PV is not generating.

The National Grid has not produced any tariff forecasts for 2020/2021 as of yet. This means it’s difficult to gain a clear picture of what the future holds for pricing under the new scheme. One thing is for certain though, commercial energy users will front the cost of the new project and the scheme will cause prices to increase. Especially for those who have previously taken advantage of Triad avoidance measures.

What next?

What can organisations do about the changes?

If you are reading this then the likelihood is that your organisation is at risk of a dramatic increase in energy costs. We have an expert team at Kudos who can look into your current energy situation. Our team can thoroughly inspect your contractual terms and conditions to reduce the risk and potentially fully prevent price increases due to the new scheme.

What else can you do?

A good place to start would be to look into the terms and conditions of your energy contract and inspect whether or not there are any fully fixed elements. If there are, these areas may not suffer from increases during the contract period. If you are not certain of how to do this we can inspect the contract elements directly with your supplier on your behalf and dispute any price increases.

How to prevent price increases?

If you are worried about your business energy prices increasing due to TCR then do not hesitate to get in touch for a free consultation. Your experts will talk you through everything that you need to know and ensure that you are not going to overpay!