When you’re paying hefty business energy bills, the last thing you want is unexpected extra costs to bust your budget.

 

But the way in which certain non-commodity elements of energy bills are calculated means changes and reconciliations are regular occurrences. And now there’s another possible cause of unforeseen charges – challenges to new charging methodology decisions.

 

As you are probably aware, Ofgem has recently reviewed the benefits embedded generators can receive when exporting to the grid.

 

Winners and losers

As with most pricing reviews, there are winners and losers. In this case, embedded generators – receiving Transmission Network Use of System (TNUoS) benefits – are set to suffer a substantial reduction in payments, while consumers – paying TNUoS charges – will pay less.

 

The plan is to cut the residual element of TNUoS benefits from its current c£47/kW to just £3.22/kW over a period of three years. This reduction starts from April 2018.

 

However, a group of generators are challenging Ofgem’s decision through the courts. One appeal to prevent the new charging process being implemented has already been rejected. But a second, more thorough review is due to be heard in April.

 

Potential for mid-year price review

If successful, the current TNUoS charges for 2018/19 confirmed by National Grid at the end of January may be subject to a mid-year tariff change – and prices for demand customers will be revised upwards.

 

A second TNUoS-related challenge is also in play. Many generators believe that due to currency fluctuations, they paid more than the maximum permissible €2.5/MWh cap imposed by EU regulation for transmission charges during the 2015/16 charging year.

 

Although Ofgem has already rejected this claim, an appeal is now going to the Competition and Markets Authority (CMA).

 

Consumers may foot £123m bill

If successful, then £123-million will need to be recovered from consumers to fund a rebate. This may then trigger another possible TNUoS mid-year price change, with a further potential increase in the published rates.

 

Who said energy pricing was straightforward, eh?! We’ll keep you posted on how things progress. You can also contact your Client Lead (for existing customers) or email us at nBS@npower.com for more information and support.

 

If you want to keep up to date with all the key changes to energy policy, network charges and other non-commodity costs, sign up to receive our forthcoming newsletter, Energy Insight. Just email your details to nBS@npower.com and we’ll be sure to send you a copy.