As part of its ongoing work to create a fairer energy network, the industry regulator Ofgem launched the Targeted Charging Review (TCR) in 2017. The purpose of the TCR is to reduce distortion across the network, by ensuring that network charges are cost-reflective and paid by the relevant parties; as the current charging structures incentivise avoidance for some network users, thereby creating unfair cost burdens on others who are often not able to make the same adjustments in their usage.
The TCR is a wide-ranging programme, looking as far forward as 2022, and has so far helped to bring equitability to the network; ensuring that the burden of non-energy costs are more fairly distributed. Despite COVID-19, these changes are still expected to come into place over the next 12 to 24 months, so businesses should be preparing for potentially revised non-energy charges.
These revised TCR charges are expected to come into force from 2022 onward, though further changes will be made in April 2023.
The biggest impact will likely be on those businesses that are already employing Triad-avoidance measures—such as switching to back-up generation or reducing demand during Triad periods—as this will no longer provide the cost reduction impact it did under the previous scheme.
Customers on a fixed contract can expect a degree of price certainty, as suppliers are continuing to work closely with industry bodies and factoring this information into their pricing strategies as they receive it. The Boxfish team will advise on any expected impact as part of our normal tender process.
Though the charges are changing, the cost impact may not necessarily lead to an increase. The precise impact on each consumer will not be clear until the network has published full tariff forecasts for 2022 to 2023, which will hopefully be early next year.
For further detail on the changes, you can download our summary here—and if you’re concerned about TCR and its future impact on your business, give us a call on 0141 226 8525 or drop us a line on our contact form below.