Targeted Charging Review (TCR) and what it means for my business energy
22nd March 2021
What is TCR?
Many people are talking about the new acronym on the utility block - TCR! But what is it and how will it affect my business’ energy bills?
Ofgem proposes that the current charging methods for electricity do not accurately reflect the costs of building, maintaining and operating it. As a result, the Targeted Charging Review (TCR) was launched.
This new methodology will be implemented from April 2022 to affect TNUoS (Transmission Use of System) and DUoS (Distribution Use of System) charges that businesses often see on their bills.
What are these charges?
Transmission and Distribution charges are the costs for transporting energy from the point of generation across the national grid and subsequently from the grid to the end-users: homes and businesses. This is done over the transmission and distribution networks respectively and shown in the diagram below.
How will TCR affect my business’ electricity bill?
Energy suppliers will present the impact of TCR on their bills in different ways.
However, it appears that the main changes to TNUoS and DUoS charging mechanisms will be;
- Triad mechanism will end as of April 2022.
- Move to £/year charge which is dependent on your ASC* (kVA)
- Nationalised rates – no longer regional
*Agreed Supply Capacity
- Red, Amber and Green charges reducing
- Standing Charges increasing and differ dependent on which capacity band you fall into
- Rates still differ dependent on your location in the country and your meter type. (LV/HV etc.)
The above chart shows a consumer whose overall cost has remained fairly consistent, while for some consumers the change can be very significant as shown below. What is clear in both is the increase in the DUoS Standing charge.
Will I be better off?
There are lots of factors at play in determining the financial impact of TCR. There will be some winners and some losers.
It is expected that businesses with higher usage relative to supply capacity (ASC) will not be affected as much as those with low usage relative to supply capacity.
How can I find out more?
Brownlow has a team of energy experts on hand to look at the potential impacts that TCR will have on your energy costs and whether there are opportunities to appeal.
Drop us and email firstname.lastname@example.org or give us a call 01744 778530.