Spotlight on…The Targeted Charging Review
Last updated: 6th April 2020
If you’re feeling daunted by the upcoming changes to your business electricity bills following Ofgem’s Targeted Charging Review (TCR) then don’t worry, you’re not alone. Ofgem released its decision towards the end of last year which will change network charges for thousands of non-domestic electricity consumers, leaving many businesses wondering exactly how these new charges will be decided upon and what they can do to mitigate the impact on their energy budgets.
Ofgem has confirmed that they will be changing the way that residual costs are recovered by replacing the consumption-based charge with a simple, fixed charge. The aim of the new framework is to make network charges non-discriminatory between those who can generate their own power and those who can’t.
How will the TCR affect my business?
The actual costs businesses will face will depend on the banding they fall into, as Ofgem has decided to allocate businesses to different bandings based on their voltage level. For lower voltage customers (non-half-hourly), they will receive a fixed charge based on their net consumption volume. Higher voltage and those with half-hourly metered sites will be subject to a fixed charge based on their Agreed Supply Capacity (ASC) – also known as maximum input capacity or DUoS capacity charge.
These band allocations will be based on at least 24 months’ worth of data, and once a business is given a banding, they will remain in that banding for five to eight years.
With so many variable elements determining an organisation’s segmentation, and further information on the charges for each banding still to be decided by the Distribution Network Operators (DNOs), it’s difficult to predict exactly how these changes will affect individual businesses at this stage.
How can I mitigate the impact of the TCR review?
Although we don’t yet have definitive information on Ofgem’s bandings, there are things that every business should be doing now to mitigate the effect of these new charges.
1. Check your Agreed Supply Capacity
First and foremost, those with an Agreed Supply Capacity agreement, should be checking that it is set at the correct level; this should be done for every meter in your portfolio. Your ASC level is usually set when your supply is connected to the grid so it is prudent to check that these are still relevant and set correctly in relation to each site’s demand.
Ofgem recently announced that changes to residual charges would be delayed until April 2022. This means now is the perfect time to check your ASC levels – as it has been suggested that a two-year average of your Agreed Supply Capacity (ASC) level will be used to calculate banding levels.
2. Understand the impact of fixed charges.
Read the outcome of Ofgem’s Targeted Charging Review. Download a copy of our TCR Insight Guide ‘Decision on the Targeted Charging Review’. Understand what your fixed charges are and what they mean to you. Engage with your supplier and consultant at an early stage, as soon as the data comes out from the DNOs.
3. Lower your consumption.
Whether you’re on non-half hourly meters or you have an ASC, you should be looking to minimise your consumption where possible. Speak to your consultant about what optimisation services are available and make efficiencies where you can.
4. Consider on-site generation
On-site generation brings many benefits but is not practical for all businesses. It’s important to seek independent advice before committing to on-site generation projects, so that feasibility studies can be completed, and you can find the best solution for your organisation.
For help in mitigating the impact of the Targeted Charging Review, give us a call on 01772 689 250, or email firstname.lastname@example.org
N.B. The information contained in this entry is provided by the above supplier, and does not necessarily reflect the views and opinions of the publisher
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