What is the TCR?
What is Changing?
One of the main alterations introduced by the TCR pertains to the restructuring of residual charges. Residual charges represent the fees imposed on consumers to cover the overall expenses associated with maintaining the electricity networks, ensuring system reliability and stability. With the TCR, Ofgem suggests a change in how these charges are computed and assigned.
Traditionally, residual charges have primarily been determined by energy consumption, meaning that consumers pay more with higher electricity usage. However, with the TCR, there is a shift towards increasing the proportion of fixed charges, which do not rely on actual energy usage but rather on a consumer’s capacity or connection to the grid. This adjustment aims to distribute the costs of maintaining the networks more equitably among all users, regardless of their energy consumption levels. This entails:
These modifications will result in varied impacts on various customer groups. Generally, standing charges are expected to rise in the foreseeable future, especially affecting businesses that typically adjust their consumption patterns according to market trends. However, these immediate costs are implemented with the long-term expectation of electricity commodity prices decreasing.
To ascertain the updated costs for each business, Ofgem has introduced specific categories based on their meter setup and usage levels.
For Businesses That Don't Have ASCs
For Businesses With ASCs
(Tables from Octopus Energy Website)
How Will the TCR Affect Customers?
For a more in-depth analysis of the TCR and how it might affect your business specifically, contact RES Consulting today!
