The Targeted Charging Review (TCR) is an Ofgem led project. It assesses how residual network charges, which recover sunk or fixed costs of the network companies, should be set and recovered in Great Britain.
To deliver the TCR, Distributor Network Operators will be creating new Line Loss Factor (LLF) classes for use by the industry and valid set combinations into the Market Domain Database.
Over the next few months your clients may see changes to the LLF classes on their invoices. These relate to the amount of lost energy as electricity flows through the networks. Their new LLF may contain both letters and numbers.
What is changing?
Network Residual Charges
Transmission (TNUoS) and Distribution Charges (DUoS): A fixed charge will be levied on all final demand consumers with Domestic customers allocated a single residual charge and Non- Domestic customers segmented via a series of charging bands.
Example of band segmentation from the consultation:
Expected Impact – Winners and Losers
OFGEM advise that average domestic households will pay less and Non-Domestic will pay more, especially those that currently avoid charging due to load shifting or on-site generation. Those that do not have the ability to change their behaviour may see some reduction in costs.
Costs will also depend on where they sit within each charging band, those at the top of the banding may see a reduction in costs and those at the lower end may see costs increase.
Overall OFGEM advise that consumers that may see cost increases in the short term will benefit from longer-term savings, compared to current charging methodology.
For more information on the announcement, click here
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