Following the publication of their Minded-To position in November 2018, Ofgem published a further consultation on the Targeted Charging Review (TCR) to get feedback on their refined residual charging banding proposal.
This second consultation is open until 25th September 2019.
Out of the two options identified for residual charges, Ofgem prefer a Fixed Residual Charge, where the total allowed residual revenue will be apportioned per voltage level, then into user segments within that voltage level.
Ofgem also released the first of two SCR Working Papers this year, setting out their current thinking for potential options under the scope of the SCR. The main focus of this paper was network access options and options for network charges (including design options for charges and improving location accuracy of distribution charges).
The key options for further consideration for access are firmness, time-profiled rights, and shared access rights. Other options will also be considered including short-term access or use-it-or-lose-it or use-it-or-sell-it mechanisms.
For network charging, two key areas were identified for reform: network cost models and locational granularity. Five basic options for design of distribution use of system charges were identified, including: agreed capacity, actual capacity, volumetric time-of-use, dynamic charging and critical peak rebates.
What’s next?
- Ofgem plans to publish the final decision on the TCR in the next two months.
- In summer 2020, Ofgem will consult on their draft SCR conclusions.
