UK Law and Practice Contributed by: Tom Sprange KC, Andrea Stauber, Martina Antosova and Lucy Pearson, King & Spalding International LLP
directly by consumers. As of January 2025, TNU- oS charges expected to be levied on generators in 2025/2026 were forecast to be circa GBP1.13 billion and TNUoS charges on consumers were estimated to be circa GBP3.96 billion. Recently, stakeholders have raised some con- cerns around TNUoS charges, including their cost-reflectivity, unpredictability and absolute values. On 1 October 2021, Ofgem issued a call for evidence in respect of TNUoS charges. On 25 February 2022, Ofgem confirmed that it will be asking the National Grid ESO (now NESO) to launch and lead task forces under the Charging Futures arrangements. In order to ensure that charges remain cost-reflective, the task forces will: • consider the root causes of unpredictability in TNUoS charges and how they might be addressed; and • examine the input data into the current model used to calculate the locational element of TNUoS. The task force was set up in May 2022 and most recently met in May 2024. Further, Ofgem will itself be undertaking a significant programme of work looking at the longer-term purpose and structure of transmission charges. Specifically, it will consider the trade-offs between market signals, network planning and network charging signals necessary to foster a flexible, net zero energy system. In September 2024, Ofgem issued an open let- ter to stakeholders raising concerns about the projected charge increases and their impact on investment decisions and consumer costs. Ofgem proposed a temporary cap and floor on TNUoS charges to mitigate these risks and strongly encouraged NESO to raise a code mod-
ification proposal to amend the charging meth- odology at the CUSC panel in October 2024. The obligation to pay TNUoS charges and the methodology for their calculation is set out in the CUSC. The charges may be positive or nega- tive, depending on location, and their recovery is split between electricity suppliers and genera- tors. Charges to generators are based on their transmission entry capacity (TEC). Charges to electricity suppliers and large industrial cus- tomers are based on their electricity demand at peak times. TNUoS tariffs are calculated using a Transport and Tariff model – also known as the Direct Current Load Flow Investment Cost Relat- ed Pricing (DCLF ICRP) model – and are pub- lished annually by January 31st and take effect from April 1st each year. The TNUoS methodol- ogy is published in Section 14 of the CUSC.
4.7 Open-Access and Non- Discriminatory Transmission
The Electricity Standard Licence Conditions confirm that preferential or discriminatory behav- iour as between any persons is prohibited (see Conditions D5 and E19).
5. Distribution 5.1 Constructing and Operating Electricity Distribution Facilities
DNOs are required to have a distribution licence under the Electricity Act 1989. Ofgem is respon- sible for issuing such licences, which are granted under Section 6 (1)(c) of the Electricity Act 1989. The holder of a distribution licence may not hold an electricity generation licence or a sup- ply licence.
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