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Issue 894 | Five-year view of TNUoS Tariffs - 2020-21 to 2024-25

Issue 894 | Five-year view of TNUoS Tariffs - 2020-21 to 2024-25

Rowan  Hazell Rowan Hazell Analyst

Five-year view of TNUoS Tariffs - 2020-21 to 2024-25 26 April Headline Assessment 1 Assessment & recommendation National Grid Electricity System Operator (NGESO) published its latest five-year forecast of transmission network use of system (TNUoS) charges on 3 April. Total transmission owner allowed revenue to be recovered through TNUoS charges is forecast to be £2,950.8mn in 2020-21, rising to £3,459.2mn in 2024-25. The amount to be recovered through generation tariffs reduces from £415.1mn in 2020-21 to £388.9mn in 2024-25. The generation tariffs are set to ensure that the average tariff remains below the €2.50/MWh limit set by the European Commission. Demand tariffs are forecast to increase over the five year period. In 2020-21, the average gross half-hourly tariff is forecast to be £51.11/kW, rising to £61.71/kW in 2024-25. Non half-hourly (NHH) tariffs are forecast to increase from 6.52p/kWh to 8.00p/kWh. NGESO said that there were two main drivers to the changes to tariffs over the five years. The error margin in the calculation of the cap on generation charges has reduced from 21% to 16%, which has the effect of increasing the amount of revenue to be collected from generators. The second driver the increase in the amount of revenue to be recovered. The small generator discount has been included in tariffs for 2020-21, recognising Ofgem’s recent extension decision. NGESO has also made assumptions about the impacts of RIIO-T2, but said that various TNUoS methodology aspects would need to be revised and updated as ...

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