Marc Smeed considers the implications of a fresh Ofgem decision on generation TNUoS tariffs.
Ofgem yesterday made a decision on the CUSC mod CMP261, you can see it here. The regulator has decided to reject the proposal. I don’t recommend you read it – the decision notice itself is fairly hard going. Nonetheless, it has some potentially very significant implications for TNUoS charges in that generation TNUoS charges may go up in the long term.
The modification proposal itself was set out as a TNUoS rebate to generators. The rebate was justified because it seemed as though National Grid had inadvertently (through the correct application of the CUSC) breached EU law by charging too much TNUoS to generators during 2015/16. However, Ofgem has decided to reject the proposal because it believes that the limit set out under the EU regulation has not been breached. The reason for this is that they believe ‘local’ charges should be excluded from the calculation of the ‘cap’.
This poses some (alarming) questions about how charges should be calculated in the future. Alongside the falling volumes of energy being generated by transmission connected generators, local circuit charges (in particular offshore charges) have been exerting downward pressure on the total amount of money that can be collected through generation TNUoS charges with the EU cap in place. However, if (when) a future modification is raised by industry to reflect this decision, and should that modification be successful, then it is likely that all generation tariffs are going to go up….
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