What’s happening with Third Party Costs? Download our free guide now

2nd September 2020

Discover what’s recently changed, and why, with Third Party Costs (TPCs).

Third Party Costs - also sometimes referred to as non-energy or non-commodity costs - amount to around 60% of a typical energy bill. These charges cover a vast number of schemes, such as the Renewables Obligation, as well as government levies and system fees.

The energy market has changed enormously since the coronavirus pandemic first struck the UK in March 2020. Add to that the changes brought about since Ofgem’s Targeted Charging Review reported back, and you can see a hugely different picture of TPCs beginning to appear.

We’ve produced a special guide to help you understand how these changes to non-energy costs might affect you and your business. You can download your free copy now.

Why are TPCs changing?

The energy marketplace has changed hugely in the last six months or so. The UK’s lockdown led to an enormous fall in demand for electricity – with weekday peaks almost disappearing and the entire week tending to look more like a weekend.

This drop in demand has significantly reduced the charging base for Third Party Costs (TPCs). This has been accompanied by major changes, including:

Ballooning costs of Contracts for Difference (CfD) in the first half of 2020, along with the introduction of a loan from the Department of Business, Energy and Industrial Strategy (BEIS) to help cover these costs in the short term, recovery of which has been deferred to Q2 2021.
A proposal to defer the additional Balancing Services Use of System (BSUoS) costs rising from COVID-19 incurred in 2020/21 into the 2021/22 charging year. A decision on this is expected imminently.

Meanwhile, the Targeted Charging Review has also continued to proceed, with Ofgem confirming that the changes to the Balancing Services Use of System (BSUoS) charges would take effect in 2021 and the changes to the Distribution Network Use of System (DUoS) charge would take effect in 2022.

Once implemented, customers who were previously able to avoid TNUoS charges by reducing their demand during the TRIAD periods will be unable to do so.

We anticipate a similar change for DUoS charges, which we expect to reduce costs for those currently unable to avoid peak consumption periods. A set of bandings will determine the costs of the new residual charges, though these aren’t yet finalised.

You can find full details of all these changes, along with those our experts expect to happen with the other TPCs, in our free guide. Why not download your free copy today?

Download our free guide today