Transmission network use of system (TNUoS) charges are partly based on a locational element, determined by which charging zone the network user is in. There are currently 27 zones for generators – in this Chart of the Week we look at how National Grid ESO is seeking to change that.
National Grid ESO re-evaluates how many charging zones there should be for the start of each price control period. It has found that continuing to use its current methodology would lead to the number increasing to around 50 from April 2021, when the RIIO-T2 price control begins. It considers that this would create too much uncertainty for investors and TNUoS-liable generation, and so has proposed to instead align the zones with the demand zones (the Grid Supply Point regions). To do this, it has raised CUSC modification CMP324 Generation Zones – Changes for RIIO-T2.
Figure 1 shows how big this change would be – there are 14 demand zones and few map onto the generator zones. The most dramatic difference would be in Scotland, which would move from having 12 generator zones to only having two.
The move towards a less granular charging scheme for generators may seem curious given the direction of travel for distribution charges and the amount of attention charges in general are getting from Ofgem’s Significant Code Reviews at the moment. However, National Grid ESO has suggested that granularity is less important for transmission charges and outweighed by the benefits in simplicity and predictability. This modification will have real consequences for generator charges and it is expected that other parties will propose competing solutions.