Recovering the cost of running and maintaining the National Grid.
Electricity Market Reform (EMR)
In summer 2014 new legislation came in to force which introduced new costs in to the electricity market, through a package of measures known as Electricity Market Reform (EMR). It has been designed to encourage new investment in low carbon generation and in the provision of generation capacity for peak usage times. Through EMR, two key mechanisms were introduced - Contracts for Difference (CfD) and Capacity Market (CM).
CfD provides top up payments to generators to ensure they receive a guaranteed price for the power they produce, which is managed by the Low Carbon Contracts Company (LCCC). For more information visit https://lowcarboncontracts.uk/
The CM provides ongoing payments to generators to ensure there is sufficient reliable capacity during peak usage – this is managed by the Electricity Settlements Company. The LCCC and the Electricity Settlements Company are independent companies set up by the government. For more information about the Electricity Settlements Company visit https://electricitysettlementscompany.uk/
EMR costs have not been included in any contracts agreed on or before 31 July 2014. For contracts agreed from 1 August 2014 we’ll have included estimates of EMR costs on all new quotes which run past 1 April 2015.
For further information about EMR visit our questions and answers page or visit www.gov.uk/electricity-market-reform.
The Renewables Obligation (RO)
RO is a mechanism designed to support large-scale renewable electricity generation. Through the RO, the Government places an obligation on all licensed electricity suppliers to source a proportion of the electricity we supply to customers from renewable energy sources. As the UK is generating much more renewable energy than ever before, the level of supplier obligation and consequently the cost to you - as our customer - has also increased.
Read our FAQs guide about The Renewable Obligation or visit www.ofgem.gov.uk/RO
In April 2010, the Government launched the Feed-in Tariff (FiT) scheme to encourage homes and businesses to generate their own renewable, low carbon electricity using solar photovoltaic (PV) panels, wind turbines or other renewable technologies. The FiT scheme pays registered generators for every kilowatt of electricity produced and for any electricity exported to the grid. FiT accredited generators are registered with Ofgem by their energy supplier (i.e., us) in order to receive generation and export payments. Ofgem ensures all suppliers only pay out their portion of FiTs, based on their share of the energy supply market. There has been a significant increase in the uptake of solar PV installation in the UK over the past few years, meaning that more FiT qualifying electricity is generated and therefore a rise in the number of payments needed to be paid
View our FAQs guide about the Feed-in Tariff or visit www.ofgem.gov.uk/fits
When the system can’t transmit the power generated at a particular location to where there’s a demand for it, National Grid will reconfigure the system. They may increase or lower the amount of electricity being supplied to the system at different locations. The costs incurred are known as constraint costs and are passed on equally to generators and suppliers as the Balancing Services Use of System (BSUoS) charge.
To find out more visit www2.nationalgrid.com/bsuos
Distribution Use of System
Electricity is distributed around the UK by Distribution Network Operators (DNOs), licensed by Ofgem. They own and run the distribution network of pylons and cables that carry electricity from the national transmission network (owned and managed by National Grid) to homes and businesses. DNOs don’t sell electricity, they only distribute it.
Transmission Network Use of System (TNUoS) charge recovers the cost of running and maintaining the National Grid. Providing a reliable source of electricity needs a reliable transmission network, to connect power stations to distribution networks across the country.
To find out more visit www.nationalgrid.com
We’re here to help
Our dedicated team is here to help, whatever your business needs. Call 02476 42 42 42 (select option 3 for Corporates)
We’re here from 8.30am - 5pm Monday to Thursday and 8.30am - 4pm on Friday.