Ofgem has confirmed that some of the plans included in the Targeted Charging Review (TCR) have been delayed until 2023.
In a recent open letter, Ofgem confirmed that it planned to delay part of the Targeted Charging Review which was set to be implemented from the 1st of April 2022. The reforms are being put in place to help reshape the nation’s energy network, managed by regulators, Ofgem.
In a major attempt to decentralise the energy network, the review would amend various charges relating to the residual component of distribution and transmission network costs. This can translate into around 10% of the overall price of electricity.
The amendments to distribution charges is still expected to be implemented from April 2022, however, the planned revision of transmission costs has been delayed by 12 months – 1st of April 2023.
Changes from the initial consultation period have contributed to the delay, with costs for Energy-Intensive users differing greatly during this time. This postponement will now allow these users to access additional revenue streams to offset the impact.
This is the second time the TCR roll-out has been delayed, with an initial target of 2021 pushed back due to an insufficient notice period for suppliers in order to implement the changes.
This delay does raise some concerns for consumers in regard to two-year fixed contracts, however, the impact is likely to be insignificant. A ‘transition premium’ was expected to be passed on from suppliers to fixed-price renewals between 01 May 2021 and 28 February 2022. This premium is now likely to be incurred over the next 12 months.
A further update is expected to be published by Ofgem this month, although the consensus in the energy industry is that these changes will be confirmed, with no further amendments.
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