Ofgem’s Targeted Charging Review – What does it mean for energy users?

How will TCR affect your organisation?

Ofgem’s recently-announced Targeted Charging Review will change the way the electricity networks recover charges. The aim of the review is to spread the cost of maintaining the electricity grid more evenly across business and households, and to modernise the UK’s electricity network.

The changes will apply from 2022, which is earlier than many energy users were expecting, and might mean that changes to your electricity charging will affect how you plan your energy use.

What are the most important changes?

Triad charges will be replaced by a fixed charge system. This will be a more simple method of collecting residual charges for the energy sector overall, with a fixed charge, irrespective of business size or location.

This will be put in place from 1st April 2022, but it is recommended you review your load management strategy now.

How will this affect your energy charges?

How these changes affect your business depends on how you currently use electricity.

If you are a large energy user who has used load management to avoid Triad charges, you will not benefit from lower charges as a result of this any longer. Some large energy users who have used embedded generation to export electricity to the Grid during Triad periods will also lose the benefits that this has given in past years. In these cases, you are likely to see charges increase.

If, on the other hand, your business is a large energy user but is not able to load manage at Triad periods, your electricity costs may reduce thanks to the overall costs being more evenly spread amongst users.

Half-hourly metered supplies will be charged based on their Agreed Supply Capacity (ASC) and voltage level. Smaller business energy users, with no specific Agreed Supply Capacity (ASC), will join charging bands based on their volume of consumption.

What Should You Do To Prepare?

While the justification for load management is largely removed by these changes, it is important that your business understands how it will be affected.

If you have become used to reducing your load during times of peak demand, there is an opportunity to review your energy use and identify whether your site can operate more efficiently under the new arrangements.

Unsure of the impacts on your business?

If you would like more details or to discuss the effect of these changes on your operations, get in touch. Call 0161 448 7722, email hello@envantage.co.uk or get in touch.

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• Energy
• Procurement

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