Energy prices & policy

In a surprise move, National Grid has today written to Ofgem to ask for more time to understand forthcoming changes to transmission charges.

These changes have been proposed by Ofgem as part of its major shake up of transmission and distribution charges under its Targeted Charging Review.

New methodology for the residual element of Transmission Network Use of System (TNUoS) is currently due to come into force in April 2021 (and in April 2022 for Distribution Use of System (DUoS) charges).

Some larger consumers would see higher bills as a result – and a withdrawal of existing benefits from being flexible around electricity use at peak times (via Triad management).

National Grid – which has been working alongside the UK’s Distribution Network Operators (DNOs), suppliers and the wider industry – says it’s “fully supportive” of Ofgem’s aims that the TCR should “deliver benefit to consumers”.

Significant risks identified

However, during the workgroup process and consultation to look at the demand residual methodology, National Grid said “significant issues have been raised that question the value and impacts to consumers”.

It highlights “risks to suppliers and larger customers of implementing the transmission demand residual reform as currently set out in Ofgem’s direction for April 2021”.

National Grid also cites “regular and consistent feedback from market parties of the risks to them and consumers from adopting an April 2021 implementation.”

Too little time to understand impacts

Because the data for new tariffs has only recently become available – and final charging bands and tariffs are not due to be finalised by Ofgem until Quarter 4 – National Grid is concerned that suppliers and system users “have not been able to understand the effects of the methodologies that have been put forward and are unaware of the full impacts on them of the changes”.

It also notes that as consumers will receive invoices with the new TNUoS charges in April 2021 – having only had notification of approximate final charges late in 2020 – this provides “very little time for parties to truly understand the impacts on them, adjust their business models in response to the new tariffs and for suppliers to pass the consumer benefits through bills.”

Proposing current modification withdrawn

So National Grid is proposing the current modification proposal is withdrawn “to give further time for consideration of the issues raised in the workgroup and in the consultation responses, a review of the impacts and the implementation timescales.”

However, as yet, there is no request to delay or amend modifications to distribution charges, which are due to be implemented in April 2022.

We are aware this news has the potential to impact your future electricity charges and possibly business operations. So we will, of course, keep you posted as the situation develops.

If in the meantime, you have any queries, please do get in touch with your dedicated Client Lead (for existing customer). Or email us at nBS@npower.com.

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