The UK energy industry and how it charges for electricity has gone through huge changes.
The Targeted Charging Review (TCR), an OFGEM-led project, has reassessed how electricity network charges should be set and recovered in the UK.
What are the component costs of a bill?
Electricity bills are made up of a combination of commodity and non-commodity charges which are influenced by volatile market conditions and different organisations within the supply chain. The non-commodity costs make up over 60% of your bill, including charges to operate and maintain the network infrastructure - Distribution Use of System (DUoS) and Transmission Network Use of System (TNUoS).
Until the recent changes, users could reduce their contribution to both these costs by using their own generators to avoid using power at peak times. Whilst this was great for those larger businesses, others without the means to move their energy still had to pay the charge.
Under the TCR changes the DUoS and TNUoS are now charging a fixed daily charge and standing charges based on a voltage-based banding system. This replaced the old Triad charges added during winter months (November to February) for those with half-hourly meters.
So whilst there are reductions in the DUoS unit rate, this is offset by higher fixed charges recovered as part of the monthly standing charge. This was designed to provide a fairer and more practical way of collecting the system revenue, affecting some businesses more than others depending on their consumption patterns.
This reform was accelerated to support the DUoS losing money through lockdown because of lower than forecast energy use.
New distribution bandings
When did things change?
DUoS changes came into effect from April 2022 whilst TNUoS changes were launched in April 2023.
Mitigating the impact and costs for clients is another part of the procurement service our team actively provides.
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