Targeted Charging Review: What’s happened in 2024 and what can you expect from 2025? 

Maintaining, operating and building our electricity network costs money, and everyone contributes to these costs in some form. This is reflected in the non-commodity cost element of your bill, also known as third party charges. 

Ofgem’s Targeted Charging Review (TCR) established a new system where network owners charge energy customers for the use of the electricity networks in the UK. 

This marked a substantial change to third party charges, reforming the residual element of transmission and distribution network charges, Residual charges pay for the maintenance of the existing electricity network, mostly for costs which have already incurred, such as past investment in underground cables.  

The impacts of TCR came into effect in April 2022 and 2023. Over a year on, we are examining what has been happening with these costs in 2024, and what can we expect from 2025.  

But first, let’s cover the terms we are going to be discussing. 

What are Distribution Use of System (DUoS) charges? 

Businesses pay this cost to their supplier, which is then passed to Distribution System Operators (DNOs) towards maintenance of local electricity distribution networks. This charge varies by region, as each DNO sets their own, within Ofgem’s price restrictions. 

What are Transmission Network Use of System (TNUoS) charges? 

Charged from all suppliers and generators, this covers installations and maintenance in the transmission system. 

What are Balancing Services Use of System (BSUoS) charges? 

This charge is paid to National Grid ESO, the electricity system operator for Great Britain, towards day-to-day costs including the cost of balancing the electricity transmission system. 

2024/25 Demand tariffs 

What has happened in 2024? 

• DUoS: Rates have increased, higher % increase in the standing charge element compared to the other elements. 
• TNUoS: Charging methodology as per previous year, on average a reduction in the £/day rate.
• BSUoS: Charging methodology as per previous year with a six-monthly rate published nine months prior to period. Any under/over recovery will be applied in future periods. Apr 24 – Mar 25 rates were about 25% lower than the Apr 23 – Mar 24 rates. 

2025 Indicatives 

 

What could happen in 2025?

• DUoS: On average there is a reduction in the standing charge element. Other elements increase, with the biggest increases in Capacity charges. Also, where previously the excess capacity charge was higher than the capacity charge, both rates are currently published to be the same.  

• TNUoS: Latest draft forecast shows an increase from the 2024 rates of about 30%.  

• BSUoS: Continuing with the methodology though seen some variances between initial draft rate and the final published rate. Apr 25 – Mar 26 rates about 15% higher than the Apr 24 – Mar 25 period.