UK Law and Practice Contributed by: Tom Sprange KC, Andrea Stauber, Martina Antosova and Lucy Pearson, King & Spalding International LLP
accordance with Schedule 3 to the Electricity Act 1989 compulsory purchase powers can be used by statutory undertakers to acquire land or rights over land for the installation and retention of electric lines. Compulsory purchase is intended as a last resort to secure the assembly of all the land needed for the implementation of projects. Compulsory Purchase Orders should only be made where there is a com- pelling case in the public interest to do so and will require a public inquiry to be held before any decision is reached if there are any objections from owners, lessees or occupiers of the land. 4.5 Monopoly Rights to Provide Transmission Services The transmission system in England, Wales and Scotland as a whole is operated by NESO, which is responsible for ensuring the stable and secure opera- tion of the national electricity transmission system. There are four companies that own the onshore trans- mission system in the UK: • National Grid Electricity Transmission plc; • Scottish Power Transmission plc; • Scottish Hydro Electric Transmission plc; and • Northern Ireland Electricity Networks Ltd. 4.6 Transmission Charges and Terms of Service Ofgem is responsible for governing transmission licences. In turn, and as noted in 1.5 Central Planning Authorities , Ofgem is governed by GEMA. GEMA’s powers are provided for under the Gas Act 1986, Elec- tricity Act 1989, Utilities Act 2000, Competition Act 1998, Enterprise Act 2002, and measures set out in other Energy Acts – the latest one entering into force in October 2023. With regard to transmission charging arrangements, Transmission Network Use of System (TNUoS) charg- es are levied on generators and suppliers for transmit- ting electricity across Great Britain’s electricity grid network. TNUoS tariffs are calculated, set and billed by NESO, which recovers revenue from generators and suppliers and pays it to the GB TOs.
TNUoS charges represent a proportion of overall transmission costs, with the remainder being met directly by consumers. As of January 2026, TNU- oS charges expected to be levied on generators in 2026/2027 were forecast to be circa GBP1.23 billion and TNUoS charges on consumers were estimated to be circa GBP6.38 billion. 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. In September 2024, Ofgem issued an open letter to stakeholders raising con- cerns 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 encour- aged NESO to raise a code modification proposal to amend the charging methodology at the CUSC panel in October 2024. The obligation to pay TNUoS charges and the meth- odology for their calculation is set out in the CUSC. The charges may be positive or negative, depending on location, and their recovery is split between elec- tricity suppliers and generators. Charges to genera- tors are based on their transmission entry capacity (TEC). Charges to electricity suppliers and large indus- trial customers 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 Related Pricing (DCLF ICRP) model – and are published annually by January 31st and take effect from April 1st each year. The TNUoS methodology is published in Section 14 of the CUSC.
378 CHAMBERS.COM
Powered by FlippingBook