The headline points from David’s report are:
The review is a consultation on changes to the way in which OFGEM recovers the costs of the networks used to transport electricity to homes, public organisations and businesses. These costs are recovered through two types of charges: ‘forward-looking charges’ which send signals about how much costs will increase (or decrease) with network usage, and ‘residual charges’ which recover the remainder of the costs. … This review would aim to ensure that those who take action which benefits the electricity system and consumers as a whole pay less.
- This should mean that the average electricity bills will decrease but potentially some households who use the least electricity could face an increase when these changes fully come into effect. Not great for those in fuel poverty.
- Climate change activists may be concerned because the cost per unit of electricity will come down, so there is less incentive to cut down your energy use and hence carbon dioxide emissions.
- On the other hand, this will promote the use of electric vehicles because, in effect, the fuel cost has come down – replacing the fossil fuel emissions from your old toxic car is good.
- Investment in solar panels would end up saving people less if the per unit cost of grid electricity goes down. But lower transmission charges would help energy sharing in peer-to-peer schemes more attractive.
- Ofgem’s minded-to approach suggests that if you are planning new energy efficient housing, with ample onsite generation for homes, which don’t consume much energy, you will be hit by increased fixed charges, and get less money for any electricity you export. This may create sufficient financial incentive to either turn the site into a gated community with a single commercial meter covering all users – a micro-grid. Or indeed you might want to go off-grid altogether, which might more directly challenge the current legacy network.
- In addition, because the cost per unit of electricity will decrease, there may be less incentive to invest in renewables and energy efficiency measures.
- There is concern that these measures do not directly support renewable energy, or energy efficiency measures and there is a lack of certainty about whether these changes also support reduced network charges for local transmission of locally generated energy.
So, if you think these issues affect you, or would like to learn more then take a look at the Targeted Charging Review and respond by February 4. It’s also worth checking out the BEIS consultation on small scale local generation SEG link here – deadline March 5. This is exploring how households with generation and storage can be encouraged after the end of export tariffs.
EPILOGUE: I have included below a few responses to the consultation for your perusal: