Targeted Charging Review

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Targeted Charging Review Consultation Released

On 28 November 2018 Ofgem released its Targeted Charging Review (TCR): Minded to decision and draft impact assessment consultation, and would like to hear your views on taking this forward. The TCR consultation can be accessed on the Ofgem website here.

To get a quick overview of the consultation listen to the Lead Secretariat's Podcast in which we talk about the five key areas below that Ofgem are consulting on: 

> Distribution and transmission residual charges
> The application of balancing services charges (BSUoS)
> The Small Generator Discount
> Transmission generation residual charge
> Balancing Services Charges Task Force

Watch the webinar that the Lead Secretariat hosted with Ofgem on 11 December 2018 which gives you an overview of  the TCR Minded to decision and draft impact assessment consultation here, the slides from the webinar can also be viewed here.


Summary of Stakeholder Engagement over the Spring & Summer

Ofgem released a note capturing the conclusions from the technical stakeholder workshops held in April 2018. You can find out what happened here.

We hosted a Target Charging Review webinar on 29 August 2018, where Ofgem gave an update on their progress. To get yourself up to speed in time for the next consultation launch, you can watch a recording of the tutorial here. You can also grab a copy of the slides here.


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A Significant Code Review

In August 2017, Ofgem launched a Significant Code Review (SCR) as the process to drive forward the Targeted Charging Review. The SCR was launched to address their 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 is looking at how electricity network residual charges should be set in future, for both transmission and distribution. The principles Ofgem are proposing to use to assess potential changes are:

1. reducing distortions 

2. fairness

3. proportionality and practical considerations.

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TCR Options Paper

Ofgem published a working paper (‘Targeted Charging Review: update on approach to reviewing residual charging arrangements’) in November 2017. In this paper Ofgem discusses their collected thoughts on how they intend to resolve the current framework for residual charges before outlining their proposed approach and justifications to their decisions.

  • Ofgem believe that residual charges should be recovered from suppliers, rather than generators or a combination of suppliers and generators.
  • Ofgem are proposing to take forward four in depth assessments of mechanisms for residual recovery to detailed quantitative assessment (fixed charges, capacity demand charges, gross consumption charges and baseline charges).
You can find the working paper here.
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Stakeholder Events

Ofgem held two stakeholder workshops in November 2017 after the working paper was published to allow industry an opportunity to feed in views and to discuss the Targeted Charging Review working paper. Ofgem have since released a note on the workshops.

You can find the note on the workshops here.

Ofgem held a further two workshops in April 2018. This allowed industry participants to feed into the conditions which will be used for analysis.

You can find a summary of the conclusions drawn from session in the note here.
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TCR Consultation

We are currently in a consultation window on the Targeted Charging Review, which enables you to give your views on Ofgem's thoughts before they release the full decision in Spring 2019. To help you understand their position, at the next Charging Futures Forum on 15 January 2019, Ofgem will talk you through this consultation. You can sign up here to register your interest to attend the forum. We are working on a number of materials to help guide you through this consultation and will release these shortly.

For more information on TCR you can see our guidance note here, watch the webinar we hosted with Ofgem in August 2018 here and view the slides from the September 2018 Charging Futures Forum here.