In an open letter published yesterday, energy regulator Ofgem has suggested that the National Energy System Operator (NESO) design a “temporary cap and floor intervention” for Transmission Network Use of System (TNUoS) charges.
Ofgem states a need to reduce uncertainty around the future range of TNUoS charges, particularly in the north of Great Britain where projected charge increases published by NESO’s predecessor, National Grid ESO, last year were misaligned with Ogem’s long term TNUoS policy direction.
As such, it suggests a code modification proposal be brought before the Connection and Use of System Code panel in October to establish “appropriate, individual, upper and lower limits on the £/kW charges paid by generators”, retaining locational differentials in charges and between technology types through a single GB cap and floor, that is capable of implementation from April 2026.
TNUoS charges are intended to recover the cost of installing and maintaining the GB transmission system, including offshore resources, applying to various grid-connected assets including generators, suppliers, transmission demand directly connected to the grid and embedded generators.
The open letter states that over the course of the next decade, “unprecedented levels of investment” will go towards the expansion of the transmission network to increase the capacity for transporting renewable power from generation sites in the north of GB to demand centres in the south.
Resolving uncertainty about future TNUoS charges will require a balance between retaining cost-reflective locational investment signals and minimising system costs to consumers while reducing uncertainty for investors to deliver Clean Power 2030, “in a context of uncertainty around the outcomes of REMA’s broader market reforms”.
Penned by Georgina Mills, Ofgem’s director of energy systems management and security, the open letter is the latest development in Ofgem’s planned TNUoS reforms aimed at ensuring the regime remains fit for purpose. As reported by Current± at the time, Ofgem created a taskforce to work on the issue following the Review of Electricity Market Arrangements (REMA), which recommended TNUoS and constraint management reforms.
Mills’ letter adds: “We are keen that the required pace and timing of generation investments to meet our 2030 goals is not compromised by the TNUoS regime, and that overall costs to consumers are kept as low as is possible.”
The regulator recently opened another consultation on suggested regulations for the introduction of early competition for transmission licenses-the awarding of transmission licenses for projects that have not yet undergone detailed design work. The model is another effort to meet net zero targets at the lowest cost to consumers.
