We act as a bridge between policy, industry initiatives and the industry code governance process, Charging Futures has two key parts: a quarterly forum and review task forces.
We deliver the Charging Futures Forum to enable all network users to understand the key changes that are being debated. They can ask questions of key policy makers and contribute to the evolution of our charging arrangements.
Across the electricity system, charges for the cost of building, maintaining and operating total around £10bn a year. We need to make sure charges are well designed to lay the path for the transition to a zero-carbon system while delivering consumer value.
It’s vital that we work with industry to so that they understand charging changes but also to make charges fair for all while correctly managing the system. Our goal is to operate the GB energy system safely, but at the lowest possible cost.
We work closely with Ofgem to raise the awareness of network charging and we’re the link between policy development and other key industry parties such as suppliers, generators, electricity users and networks.
Prior to the COVID-19 pandemic, Charging Futures Forums were based in London, but these now take place virtually. It’s been a challenge to plan how we run Charging Futures remotely. We’ve actually realised that having virtual meetings is better for some stakeholders and we’ve had improved feedback since going virtual.
Usually we have to limit meetings to around 100 people due to space, but we’ve had up to 150 people on the virtual events. This allows us to open up the sessions to additional industry stakeholders. We’ve made the content of the forums available for streaming, reaching more people in the industry.
All this allows us to gain valuable additional feedback, making sure we innovate while running a safe and secure energy system
There are three main types of system charges:
Transmission network charges
TNUoS (Transmission Network Use of System Charge) TNUoS charges recover the cost of installing and maintaining the transmission system in England, Wales, Scotland and Offshore.
Suppliers and generators both pay for TNUoS which ultimately gets passed through to consumers. You could compare the charges to your mobile phone – part of the monthly tariff goes to building and maintaining telephone masts. This charge pays for the transmission system upkeep and build.
BSUoS (Balancing Use of System Charge) This charge recovers the cost to balance the system to make sure there is enough energy at any given time on the system. For example, if there isn’t enough, we can pay generators to generate more power and pay large electricity users to take less energy off the system.
We’ve been chairing the Second Balancing Services Charges Task Force to review these charges – ultimately who should pay for them and how they should be paid.
This was a key piece of work as Ofgem had raised concerns about the how to make this charge fairer. it’s been an honour for us to chair and work up the final report which was sent to Ofgem in September. We worked with some of the foremost experts in the industry on the subject.
The Task Force recommended that final demand should pay for Balancing Services charges, and that the charge should be set in advance, with notice given to industry. There will likely be a cost saving to the consumer because of a lower risk premium being applied to the wholesale energy cost.
Distribution network charges
We also look at the DUoS (Distribution use of System charge). This is collected by the Distribution Network Operators rather than us.
Targeted Charging Review (SCR)
Ofgem are running the Targeted Charging Review Significant Code Review (SCR) which will reform distribution charging along with transmission charging. The aim is to level the playing field, so everybody is paying a fair amount for the ability to use a secure system 24/7.
It’s a busy time at the moment with so many reviews and the fact that Ofgem are asking us to chair so many forums, which of course we’re honoured to do. You can register for updates on our charging reforms.
One of our other tasks is to operate modifications on the back of changes.
On the Connection and Use of System Code, (CUSC) we’re currently working 47 live modifications whereas five years ago it was usually around 10.
This is due to so many changes as a result of charging reforms, and more recently some vital modifications required because of the COVID-19 pandemic.
A key stream of work that has seen us raising changes as a result of is Ofgem’s Targeted Charging Review Significant Code Review (SCR).
Ofgem directed us to make changes as a result of this after a lengthy industry consultation period. Industry fed into the review and then we were asked to make changes to best make changes in charging.
Ofgem announced their decision in November 2019, and we have recently managed to send all of the associated modifications to them in the last few weeks.
This process involved us holding numerous workgroups and consultations to gather industry views and opinions as part of the changes. We will also be responsible for managing any changes that Ofgem direct us to make, following their final decision on their Access and Forward Looking Charges SCR, a challenge we look forward to.
When we hold workgroups, we’ll often get some valid contributions from industry which feed into the change process. Working with industry helps us to gather information and viewpoints from industry and work together to come up with solutions to issues.
We submit our final reports to Ofgem, detailing solutions to a particular problem, and they decide on the best solution to implement. In our role as Code Administrator, we see it as our job to drive and facilitate conversations on important issues, helping to build solutions, before Ofgem make any final decision.