Targeted Charging Review

The Targeted Charging Review is a proposed shakeup from Ofgem designed to modernise the electricity network and raise the significant costs needed to meet the challenge of supporting the UK’s rapidly changing energy mix.

This includes two, closely linked reviews on how end-users are charged to recoup the costs of repairing and maintaining both transmission and distribution networks. These make up part of all energy user’s ‘non-commodity costs’, those parts of a bill that don’t relate directly to the wholesale cost of energy.

Access and Forward-Looking Charges – Due to come into force in April 2023, pending approval of a current consultation, these charges will change the way that distributed generation is charged to access and use the distribution network. The rapid growth of small-scale renewable generation, while needed in the attempt to shift to net zero, if putting significant additional strain on local networks. In some cases, this risks distribution equipment such as transformers reaching their maximum safe capacity. These proposed changes will see distributed generation pay different rates depending on how constrained their local grid is, as well as varying bands of additional payments for generating during periods of peak demand.

Targeted Charging Review – The Targeted Charging Review will see the previous TRIAD system replaced as of 2021. Previously, energy consumers were measured by their total demand during the three highest demand periods of a given year. These invariably fall in the early evening during the winter, when home heating and cooking demand coincides with ongoing industrial demand. Many high-energy users had implemented ways of reducing their grid demand during TRIAD periods, such as switching to battery reserve.

Instead, users will be changed Transmission Network Use of System (TNUoS) charges from 2021 onwards. Where DNUoS charges, which were partially reviewed in the Access and Forward-Looking Charges Review, recoup costs of DNOs, TNUoS cover the costs of the transmission network (National Grid). Now, charging will be based on net volumes of consumption.