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Posted 2 weeks ago | 5 minute read

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Ofgem publishes decision on CMP308 charging reforms

The energy regulator has published its decision on a proposed change to the way that the Balancing Services Use of System (BSUoS) charges are collected from electricity network users, following its Targeted Charging Review.

What are BSUoS charges?

BSUoS charges are the means by which the Energy System Operator (ESO) recovers costs associated with balancing the electricity transmission system. They recover several categories of costs, including:

BSUoS charges are currently recovered using a volumetric charge (£/MWh) from both demand customers and liable generators based on the amount of energy imported from or exported onto the network within each half-hour period.

Under current arrangements generators liable for BSUoS are those:

Interconnectors and smaller distributed (<100MW) generators and storage do not face the charge. Demand BSUoS charges are levied on suppliers in relation to their gross energy imports and the costs passed through to end consumers.

The charges have become highly volatile on a half hourly basis in recent years and very difficult for businesses and suppliers to accurately forecast.

What’s changing?

On 25 April 2022, Ofgem published its decision to approve a Connection and Use of Systems Code (CUSC) modification proposal (CMP308), which will move the charging of BSUoS, which is a non cost-reflective charge, from generation and demand to “Final Demand” only. Final Demand is currently defined in CUSC as electricity consumed other than for the purposes of generation or export onto the electricity network. This means that BSUoS will be removed from generators and charged to end user customers only in the form of a flat volumetric £/MWh charge.

In its decision Ofgem said that the key reasons for the change were:

What does this mean for I&C businesses?

As generators will no longer have to recover these costs, Ofgem expects wholesale electricity prices to reduce, offsetting the increased BSUoS costs to end customers. But if customers want certainty over these costs, they’ll need agreed upfront BSUoS for supply contracts with an end date beyond 31 March 2023.

What does this mean for generators?

What does this mean for battery storage?

How can GridBeyond Support you

Gridbeyond is a market leader globally supporting flexible assets to optimise market value via ESO schemes and traded energy markets. As a business we are well placed to support generators understanding the implications of changes to the UK regulatory regime and further support asset owners understand how these changes can impact your future revenues.

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