A rookie's guide to TNUoS and DUoS electricity supply charges
As a facilities manager looking to downsize your electricity costs, you may have heard the terms TNUos (Transmission Network Use of System) and DUoS (Distribution Use of System) thrown around, but what do they represent?
Distribution Use of System (DUoS) charges
What are they?
DUoS charges cover the ongoing maintenance to the UK distribution network, along with any required upgrade works. They are set by the fourteen Distribution Network Operators (DNOs) and are heavily regulated by OFGEM. Rates change annually each April and are published on the DNO’s websites.
How do they work?
There are numerous types of distribution charges, some of which are fixed daily charges, and others that are consumption based. Each supply has a different tariff based on where they are located in the country, and the type of supply equipment installed at the site.
Fixed charges include a daily standing charge, and an Available Supply Capacity (ASC) charge. Each HH meter has an allocated ASC based on how much load the DNO has guaranteed to provide for that site on the local network. This value is multiplied by the published ASC rate to give an ongoing charge. Clients can apply to increase or decrease their ASC if requirements at the site change.
Each meter is also billed consumption-based charges, split into ‘red’, ‘amber’ and ‘green’ rates, which apply to consumption at different times of the day. The time periods and rates are individual to each DNO, but consumption in the peak red periods are the most costly, with green consumption, predominantly evenings and weekends, being the cheapest
Who am I charged by?
Your electricity supplier will bill you for these charges on behalf of the DNOs as part of your supply invoices, and make the payments to them. If you have a fully-fixed contract, the majority of these charges will be included in your unit rate.
How can I reduce my DUoS charges?
Whilst DUoS rates are fixed and non-negotiable, there are still options open to you to reduce the burden of this charge.
If the Maximum Demand at your site is consistently lower than your ASC, and you do not expect this to increase over the next 12 months, you can apply to reduce the ASC to a more appropriate level. This will result in a lower monthly cost, and you can benefit from this immediately whether you are on a fixed or pass-through contract.
As DUoS charges are billed based on the time of day that you consume, shifting your load from peak times to off-peak times or using alternative sources of generation during the red periods can have a significant cost impact. If you are billed on a pass-through basis, the effects of this will be felt instantly. If your contract is fully fixed, there will be no immediate impact, however it is likely to have a positive impact on your next renewal as suppliers will price less DUoS cost burden into the quoted unit rates.
What are they?
TNUoS charges cover the maintenance of the UK transmission network, along with any upgrade works. Like DUoS, the rates differ depending on where the site is located in the country, with charges split into the same 14 regions. All HH sites in that region will pay the same rate.
How do they work?
Your charge is determined by your share of demand on the transmission network. In March each year, National Grid will retrospectively select the three half-hour periods during the preceding November-February period which recorded the highest demand, and an average is taken of each supply’s usage during these three periods to give a total demand figure, known as a Triad. This is doubled (to give a full hour’s usage) and multiplied by the relevant TNUoS rate in that region to give a final annual charge.
Who am I charged by?
As with DUoS, your supplier will invoice you for this charge, and then pass this through to the National Grid. If your contract is fully-fixed, your supplier will have factored in an amount for this into your unit rates, based on their forecasted value of your Triad value. If you have a pass-through contract, this will show as a separate charge.
As TNUoS charges can be very large (each MWh of Triad demand costs an average of £96k), typically suppliers will spread the cost across the full year’s invoices using a forecasted monthly figure. When the value of the actual Triad is known, the supplier will apply a reconciliation for the difference between the estimated charges paid, and the actual charge due. If you have paid more than the value of the actual charge, you will receive a credit, and if you have paid less, you will be billed for the extra.
How can I reduce my TNUoS charges?
As TNUoS charges are based entirely on the site’s Triad demand, any reduction you can make to this figure will result in significant savings. Signing up to a Triad Warning Service can provide insight on when to avoid significant consumption, giving you the best chance of reducing your demand and subsequently, your charges.
As with DUoS, the benefit of any action taken will be received immediately if you are on a contract where TNUoS charges are billed as a pass-through charge. On a fully-fixed contract, the benefit will only be felt at the next renewal.
Transmission Network Use of System (TNUoS) charges
To find out about our Optimised Triad Warning Service, please click here.