Targeted Charging Review
Ofgem's reform of how residual transmission and distribution network costs are recovered; replaced volumetric Triad and DUoS residual charges with fixed bands.
The Targeted Charging Review was Ofgem's programme to reform the way that the residual element of network charging — the element that recovers fixed network costs not driven by real-time use of the system — is recovered from customers. Implementation began in April 2022 and applies to both transmission (TNUoS) and distribution (DUoS) residual charges.
The core change: the residual element of network charges, which was previously recovered through volumetric pence-per-kWh adjustments (and via the Triad mechanism on transmission), is now recovered through fixed bands. Each customer is allocated to a band based on their historic agreed capacity and net volume:
- Domestic and very small non-domestic customers sit in the smallest residual band.
- Larger non-domestic customers are placed in successively larger bands, up to the largest connections.
- The forward-looking element of network charging — the locational signal — remains volumetric and time-of-day banded.
The practical effect: the link between real-time consumption and a customer's residual network bill has been broken. Triad-avoidance battery discharge, day-ahead peak shaving and aggressive demand-side response strategies that targeted residual recovery no longer save money on that line of the bill. They can still save money on energy unit cost and on the forward-looking element, but the headline incentive has changed.
For procurement, the TCR has made fixed-price contracts somewhat easier to compare and has reduced one source of basis risk; for customers with significant on-site generation or storage, it has materially reduced the value of network-charge avoidance and pushed the business case toward energy unit savings.
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Triad
The three highest-demand half-hour periods on the GB transmission system each winter; historically determined large customers' transmission cost share. Largely superseded by the Targeted Charging Review.
Read definitionDistribution Use of System
DUoSThe charge electricity suppliers pay to regional Distribution Network Operators for using local distribution wires; recovered from customers through the unit rate.
Read definitionTransmission Network Use of System
TNUoS / TUoSThe charge for using the high-voltage national transmission grid, recovered from suppliers and ultimately from customers.
Read definitionDCP161 — Excess Capacity
DCP161The Distribution Code change that introduced excess-capacity penalties for half-hourly sites that exceed their agreed Available Capacity.
Read definitionkilovolt-amperes
kVAThe unit of apparent electrical power; used to set Available Capacity on half-hourly electricity supplies.
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