Understanding Incoming Updates to TNUoS Charges for Businesses

Recently, the National Energy System Operator (NESO) published its Five-Year View, regarding the Transmission Use of System (TNUoS) and the charges associated with it. With this in mind, businesses need to consider how their monthly electricity bills are going to change. Understanding TNUoS charges is an essential part of proper budgeting. 

We’ve already given a breakdown of the impending updates, but this blog will offer a little more context, insight and advice, ensuring businesses can prepare properly for changes. 

What are TNUoS charges?

These are the charges that electricity companies pay for using the National Grid. The money is used for the installation, operation and maintenance of the Grid, and while the suppliers pay them, they pass the costs directly onto customers through electricity bills. 

The primary things impacting the size of these charges are the Allowed Revenue – the maximum money grid operators can make according to Ofgem – and the Transmission Demand Residual (TDR) – a fixed daily charge that accounts for most of the cost borne by businesses. This daily charge is based on each site’s voltage and capacity band. The TDR is defined by its ‘recovery amounts’, as in the figure the system operator is obliged to collect. 

What’s changing with TNUoS charges?

The Five-Year View has outlined some fairly significant changes to TNUoS charges, such as: 

• Allowed Revenue is projected to rise £5.1 billion in 2025/26 to £8.9 billion in 2026/27.
• TDR recovery amounts are increasing from £3.8 billion in 2025/26 to £7.5 billion in 2026/27 and further rises thereafter. 
• TDR tariffs is projected to be approximately 1.57p/KWh for 2025/26, escalating to around 3.05p/KWh in 2026/27.
•  NESO has made some adjustments to the locational components of TNUoS tariffs, although the TDR tariff will account for most charges.

Why are TNUoS charges increasing?

The increases in TNUoS charges are mostly the result of massive investment into fortifying the grid for renewable energy in pursuit of Net Zero, with upgrades and reinforcements costing tens of billions. Ofgem’s going into a new regulatory period, RIIO-ET3, with funds collected in this period powering the new changes. 

How do TNUoS charges impact your business?

TNUoS charges increasing means higher electricity bills for everyone. The charges are expected to essentially double by 2026/27, and there’s no way to tell how much higher they might rise. Frustratingly, this increase is based on fixed charges, unaffected by smart energy consumption management. 

Key consideration for business owners

Every business owner needs to be more conscious of their energy, and indeed, overall budgeting. Some important considerations should include: 

• Checking your contract terms for “pass-through” clauses that override fixed-price agreements
• Reviewing your site’s energy capacity and determining whether it could be lower, to lower your TDR band
• Keeping track of and attempting to manage all flexible costs, such as locational or time-of-use charges

Stay informed about TNUoS charges

If you’re interested in energy management or want to get a quote for your business, make sure to visit D-Energi. We provide a range of resources, updates and affordable business energy contracts to support companies in this uncertain market landscape.