Recently we have fielded questions from multiple clients about TCR, banding, and standing charges mainly prompted by cold calls from other brokers asking for supply details and offering to check this ‘for free’. With this in mind, we thought it would be useful to send out some information about this topic and how we manage ‘banding’ your behalf on an ongoing basis as part of our account management service.
So what is TCR and why does it affect your Standing Charge?
Under the Targeted Charging Review (TCR), Ofgem changed how the costs of maintaining the electricity grid, referred to as residual network charges are recovered. The main elements of residual network charges are Distribution (DUoS), Transmission (TUoS) and Balancing (BUoS) costs and historically they have been included in your unit rate. These charges are levied at higher rates at times of peak demand and this was deemed unfair as some businesses could avoid high network charges by reducing their usage during peak times and gave an advantage to large users who could afford demand management tools.
As part of the Targeted Charging review the residual network charges are now applied as a fixed costs within your standing charge. Furthermore, electricity supplies are now organised into charging banding depending on their network usage profile
- If your supply is Non Half Hourly metered the banding is related to volume or consumption
- If you supply is Half Hourly metered the banding is based on historical maximum demand measured in kVA.
Your charging band determines how much you pay. Any supply contract is agreed based on your Banding at the time of signature.
When did this come into effect?
While TCR as a principle has been under discussion since 2017 its implementation was delayed several times.
April 2022 – Band related Distribution charges (the highest proportion of the additional network charges) were introduced. You will have noticed a marked increase in standing charges around this time and also that the 3rd part of the topline of your MPAN (Line Loss Factor or LLF) will have changed from a number to a letter and a number which confirms which band you fall within or have been allocated to.
April 2023 – Transmission and Balancing Network Charges were implemented for all business customers. You will have noticed a further increase if your supply contract renewed after this date.
So is there anything a business can do to influence its banding ?
Yes! You can make sure its set correctly so you are not over paying.
Every business MPAN in the UK had to be allocated a banding and due to human error a percentage of them will just be wrong. A simple kVA or consumption review, followed by an appeal can get this revised fairly easily and often significant savings achieved.
It is important to review Authorised Capacity regularly to ensure that you are still using all of your capacity. If you are just above a banding threshold it may make a significant financial difference applying to drop your kVA even slightly to get you into a lower band. Other typical scenarios we come across are sites significantly changing the way they use energy on site. For example, a cold store with a high Authorised Capacity is now used as a packing shed, or a new site is purchased which used to house heavy manufacturing, but is now a retail space. Unless we tell the network that the consumption profile needs altered and a banding change forced through, it’s unlikely to get picked up by either the network or supplier so proactivity in managing your capacity is key.
What do Here’s the Plan do to help?
We regularly check your usage and capacity to make sure you’re in the right TCR band. If something looks off, we’ll dig into it and raise it with the supplier or network on your behalf, always running it past you for approval first.
Sometimes that means a quick fix, but other times it means pushing through an appeal to get it sorted. Either way, we can handle it.
If your site’s changed or you’ve had a cold call from another broker, we can sense check everything and make sure you’re in the right band.
We offer simple, proactive support so you’re not paying more than you should.
☎️ 01738 474630
✉️ theteam@herestheplan.co.uk
