The Targeted Charging Review has looked at how electricity network residual charges should be set, for both transmission and distribution. 

A significant code review

In August 2017, Ofgem launched a Significant Code Review (SCR) called the Targeted Charging Review (TCR). It was launched to address Ofgem’s concern that the current framework for residual and cost-recovery charging may result in inefficient use of the networks and unfair outcomes for consumers.  

The Targeted Charging Review has looked at how electricity network residual charges should be set, for both transmission and distribution. 

It has also looked at the differences in charging arrangements between transmission connected generators and smaller distribution connected generators (Embedded Benefits). 

The principles Ofgem used to assess potential changes were: 

  1. reducing distortions
  2. fairness
  3. proportionality and practical considerations

What are the next steps?

Ofgem published its final TCR decision on 21st November 2019. The decision document can be accessed on Ofgem’s website.  

There are two key areas for reform: 

  • Residual Charges 
  • Embedded Benefits  

The changes will be implemented in stages, with reforms at transmission level being introduced in April 2022 and at the distribution level in April 2022.  

A Second Balancing Services Task Force has commenced following Ofgem’s TCR decision. 

Please go to our Summary Note for more information on what changes will take place as a result of Ofgem’s decision. 

Further information on the TCR can be found below in the resources section.

Resources

2020 updates

On 9 November 2020, the ESO has published the Distribution Bands using data provided by the DNOs and IDNOs as per the methodology approved by Ofgem (see DCUSA approvals below).

On 30 September 2020, Ofgem approved Targeted Charging Review modifications to the DCUSA.

The Modifications approved are as follows:

DCP358 - Ofgem Targeted Charging Review Implementation: Determination of Banding Boundaries – Implemented 30/09/2021 – Decision Letter

DCP359 - Ofgem Targeted Charging Review (TCR) Implementation – Customers: Who Should Pay? –Decision Letter

DCP360 – Allocation to Bands and Interventions – Implemented 30/09/2021 – Decision Letter

DCP361 - Ofgem Targeted Charging Review (TCR) Implementation – Calculation of Charges – Implementation 01/04/2022 – Decision Letter

Ofgem Letter on CMP280

On 2 October 2020, Ofgem published an open letter on electricity storage network charging arrangements and determination on CMP280. This letter can be found here.

Final decision 2019

In November 2019 Ofgem published their final decision on the Targeted Charging Review with supporting documents. Here are some resources to help you understand Ofgem’s decision:

Plans to deliver TCR

  • Joint ESO and DNO Project Initiation Document to deliver TCR
  • Joint ESO and DNO Project Initiation Document to deliver TCR (updated 14 May 2020)

2018

Minded to decision

On 28 November 2018 Ofgem released its Targeted Charging Review (TCR): Minded to decision and draft impact assessment consultation. You can get up to speed using the following resources:

 

August 2018 webinar

We hosted a webinar on 29 August 2018 where Ofgem gave an update on their analytical work up to this date. You can watch the webinar here and view the slides here.

 

Stakeholder events

Following the release of the TCR working paper in 2017, Ofgem held stakeholder workshops in November 2017 and April 2018. This allowed industry an opportunity to feed in views on paper and inform the conditions to be used for further analysis. You can view:

Get in touch

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