Over recent years there have been a number of industry changes, impacting on how Electricity costs are recovered. These have included Transmission and Distribution.
From April 2023 the method of funding the Balancing (BSUoS) of the Electricity network will change, with the intention of creating a fairer system with more transparency of costs. This is referred to as modification CMP308.
Balancing the system is essential to ensure that in the event there is too little or even too much Electricity being generated, the National Grid steps in and uses the fund to take action, preventing system outages.
Prior to April 2023 BSUoS was split, with in the region of 50% being paid by generators with the cost being included in the Wholesale price and 50% being charged directly to customers based on when energy was used. From April, 100% will be recovered in the form of a fixed charge directly paid by customers. This may mean that there will be an obvious jump in fixed charges on energy invoices but should also mean that the price paid for the Wholesale element has decreased, although with less transparency.
The costs will typically be published nine months before, for a six-month billing period. However, the charges starting April 2023 were not available until recently. These short periods expose energy suppliers to an element of guessing what the costs will be. Due to this, there is the potential that where an energy supplier has underestimated the charge on a Fixed Priced contract, they may look to make an adjustment in line with their T&C. There is also the possibility that if the money recovered is not enough to fund BSUoS, then additional charges may also be passed on.
Should you need more information, this can be found here or contact Indigo Swan and we will be happy to discuss your specific position in more detail.
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