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Targeted Charging Review (TCR): Are you a winner or a loser?

16/03/2021

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The energy market is about to go through some fundamental change in the way network charges are recovered via the target charging review (TCR). OFGEM has confirmed these changes will come into effect in April 2022.  What are the changes, and how do they affect your business?

 

TCR: What are Electricity Network Charges?

The charges relate to the fixed costs of providing the existing pylons, cables etc. It also covers the difference in charges faced by smaller distributed generators versus larger generators know as ’embedded costs’. The charges are more usually known by the acronym TNUoS (Transmission Network Use of System)

Traditionally these costs have been calculated by the Triad system, largely based on an individual user’s consumption from the grid. Triads only impact businesses on half-hourly metering, meaning it is primarily related to medium and large enterprises.

Each Triad equates to one of the three highest half-hour demand periods during the Triad season, separated by a window of at least ten days between them. These periods fall between 5 pm and 6 pm when domestic and industrial consumption tends to peak.

Energy usage during a Triad period can have a significant impact on your subsequent transmission charges, a large proportion of entities’ non-commodity costs. Triads have led to a whole industry trying to predict triad periods and attempts to load manage during these periods.

By reducing consumption or using on-site generation, some business have been able to reduce or avoid these charges. On-site generation has been very popular, enabling some organsations to reduce their costs and earn money by helping suppliers balance the power system.

TCR: What’s Changing?

The existing Triad system will be replaced with a fixed charge from April 2021.  Changes to the Distribution Use of System (DUoS) due for review in 2022. The amount will be levied in bands determined by meter type.

For non-half hour meters, with no agreed supply capacity (kVA), charging bands will be determined by consumption.

For half-hourly meters, those beginning with 00, the charging band is determined by the agreed supply capacity (kVA) and voltage level. 

TCR: How will it affect your business?

If you have a high baseload (kVA), high voltage connection with no current Triad avoidance in place, you may see some savings.

If you have been relying on Triad avoidance measures such as on-site generation or load scheduling, be prepared for some increases. The previous strategies will no longer be as effective.

TCR: Summary – what can I do?

The changes do not come into effect until April next year. If you have Triad avoidance measures in place, they will still be effective until then.

Between now and then there a number of things you can do to reduce your exposure

Review your kVA – a site’s supply capacity and voltage level are the new transmission charges key determinants. More than ever, performing a kVA review and getting this right is crucial.

Energy Efficiency – As always, the cheapest energy is the energy you do not consume; given the move in transmission charges, this is now more key than ever.

Why not arrange a call with one of the energy experts here at troo to discuss how TCR might affect your business.

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