Industry charges

There are a range of industry charges to be aware of, including:

AAHEDC – Assistance for Areas with High Electricity Distribution Costs

  • The Assistance for Areas with High Electricity Distribution Costs Scheme was introduced in the Energy Act 2004. It replaces an earlier arrangement, commonly referred to as “Hydro Benefit”, which ended in January 2004.
  • The intention of the Scheme is to reduce the costs to consumers for the distribution of electricity in certain areas. Currently the only Specified Area is the North of Scotland. National Grid therefore recovers an Assistance Amount through the Scheme, which is passed to the Relevant Distributor in the Specified Area – Scottish Hydro Electric Power Distribution Ltd. This enables distribution charges to be reduced for customers within the Specified Area.
  • The tariff is reviewed each year. Click here for more details on AAHEDC and the current p/kWh price.
  • AAHEDC is an embedded benefit for generators, so a revenue is received at the same p/kWh rate for every kWh exported. EnDCo returns this benefit 100% to it’s customers.

BSUoS – Balancing Services Use of System

  • The BSUoS charge is the mechanism by which National Grid, as the GB Transmission License holder, recovers the cost of balancing the transmission network. i.e. ensures generation and demand are matched.
  • BSUoS is administered by National Grid and it charges suppliers and generators daily, proportionally to their system usage volumes.
  • The charge itself is a £/MWh per balancing mechanism unit (BMU) and is calculated for each half hour of every day. BSUoS charges can vary even when the volume is constant as the BSUoS price for any given period depends on what it actually cost National Grid to balance the system within that 30 minute period. The closer system demand is to the available system capacity, the higher the balancing cost becomes.
  • The charging methodology used, and all other relevant information about BSUoS, can be found on the National Grid web site, here.
  • EnDCo proportionalise BSUoS to individual customers based on their energy usage.
  • For embedded generation (less than 50MW) BSUoS becomes a benefit which is returned to the customer by EnDCo in full (100%)

CCL – Climate Change Levy

  • CCL is a tax on fuels that is used for lighting, heating and power, by business consumers including consumers in industry, commerce, agriculture, public administration and other services.
  • CCL is charged at a specific rate per unit of energy. The rates are based on the energy content of each commodity and are expressed in kilowatt-hours (kWh) for electricity.
  • CCL rate for electricity for 2012/13 was 0.509 p/kWh, for 2013/14 was 0.524 p/kWh,  for 2014/15 was 0.541 p/kWh and for 2015/16 is 0.554 p/kWh, for 2016/17 was 0.559 p/kWh, and for 2017/18 it is 0.568 p/kWh.

CM – Capacity Market

  • Accoriding to government there is a risk to the security of electricity supplies in the future; around 20% of the existing generating capacity is expected to close over the next decade and more intermittent (wind) and less flexible (nuclear) generation is built to replace it.
  • The Government has introduced the Capacity Market to provide an insurance policy against the possibility of future blackouts – for example, during periods of low wind and high demand – to ensure that consumers continue to benefit from reliable electricity supplies at an affordable price.
  • The Capacity Market is designed to ensure sufficient reliable capacity is available by providing payments to encourage investment in new capacity or for existing capacity to remain open. EMRS administers the payment mechanism.
  • The CM charge is calculated on the total value of power awarded in the CM auctions. This is then mutualised against electricity supplier consumption forcasts.
  • EnDCo will pass through 100% of the charge propotioned on energy consumption.

DUoS – Distribution Use of System

  • The DUoS charge covers the cost of delivering electricity over the local distribution network to/from the national transmission system and feeding it directly into homes, business and industry. This includes the costs of installing, operating and maintaining the regional distribution networks which consists of overhead lines, underground cables, substations and transformers.
  • DUoS is charged by the local Distribution Network Operator usually via the supplier and is determined by the CDCM (Common Distribution Charging Methodology) for Low Voltage & High Voltage connections.
  • DUoS can be an embedded benefit for small embedded generators.
  • DUoS is governed by the DCUSA (Distribution Connection and Use of System Agreement) to which it is a requirement that all licensed electricity distributors and suppliers become parties.

FIT – Feed In Tariff Levelisation

  • FIT is a government backed and administered subsidy to encourage the take up of renewable source power generation.
  • The FIT scheme guarantees a payment for all power generated and an additional payment for any power that is exported back onto the grid.
  • Payments are recovered from consumers via the FIT levelisation charge administered by Ofgem.

Power Contract

  • This is the mechanism of purchasing or selling power on the wholesale market.
  • Power can be traded over the counter (OTC) between two registered BSC trading parties or via either of the power exchanges.

RCRC – Residual Cashflow Reallocation Cashflow

  • Any money that a BSC Party pays in Imbalance Charges is redistributed amongst all BSC Parties, on a scale proportional to their volume of Credited Energy. This redistribution is paid as Residual Cashflow Reallocation Cashflow (RCRC).
  • RCRC data is presented on a £/MWh basis.
  • The value of RCRC varies as well as flipping between being a charge and a benefit, and is calculated separately for each individual 30 minute period.
  • EnDCo pass 100% of RCRC directly through to our customers.

RO – Renewable Obligation

  • The Renewables Obligation is the main support mechanism for renewable electricity projects in the UK and is administered by Ofgem. Smaller scale generation is mainly supported through the Feed-In Tariff scheme (FITs)
  • RO is an obligation on UK electricity suppliers to source an increasing proportion of electricity they supply to customers from renewable sources. It is a £/MWh charge that is set each year at an increased value.
  • Renewables Obligation Certificates (ROCs) are green certificates issued by the Authority to operators of accredited renewable generating stations for the eligible renewable electricity they generate. Operators can then trade the ROCs with other parties, with the ROCs ultimately being used by suppliers to demonstrate that they have met their obligation.
  • Where suppliers do not have sufficient number of ROCs to meet their obligation, they must pay an equivalent amount into a ‘buy-out’ fund. The administration cost of the scheme is recovered from the fund and the rest is distributed back to suppliers in proportion to the number of ROCs they produced in respect of their individual obligation.

TNUoS – Transmission Network Use of System

  • TNUoS recovers the cost of developing, installing and maintaining the National Electricity Transmission System required to allow the bulk transfer of power between connection sites, generation and distribution grids and to provide transmission system security.
  • It is calculated by taking the 3 highest periods of consumption between 1st November and the end of February, that are separated by not less than 10 days, averaging consumption (or embedded generation) through a meter over those 3 periods and multiplying this by the TNUoS Charge ( £/MW ) for that meter’s National Grid Zone ( which are similar to but not exactly the same as distribution areas ).
  • TNUoS is administered by the National Grid and all required information on the charge may be found here.
  • Embedded generators can receive TNUoS as a benefit. This is generally paid out in mid summer each year.
  • IMPORTANT: Ofgem have anounced changes to TNUoS that will reduce embedded benefit significantly over the next 3 years. More information may be found here.