NESO has published its initial view of the transmission charges for 2027/28. For most business sites, it means a further 23 per cent increase in fixed charges on top of the average 62 per cent increases that have just been implemented. We won’t hear how the charges will continue to increase until September, but NESO is forecasting allowed revenue for the transmission operators will total £46 billion over this price control period. Revenues in the previous five-year period were less than £20 billion.
Ameresco’s assessment of costs in 2024/25 is that the cost of all government support schemes and network charges totalled almost £25 billion. In 2027/28, transmission charges alone will be 36 per cent of that figure. Distribution networks will also need to grow. The cost of government support schemes will also increase as more generation supported by the Contracts for Difference scheme comes online, carbon capture projects are developed and unabated gas generators become reserve capacity.
One cheer for regulation
The decision has been made to regulate activities of firms like Ameresco. Ofgem will have powers to set rules, monitor compliance, investigate misconduct and enforce penalties, once parliamentary time allows. The Department for Energy Security and Net Zero anticipates that these changes will improve transparency and competition between energy consultants, make it the norm to seek a wide range of quotations from the market and improve customer service.
Some have lauded the introduction of regulation, claiming it will get rid of mis-selling and improve trust. We are not so convinced, as the scope of regulation on energy consultants is limited. Initially, it will cover the activity of arranging energy supply contracts — just arranging energy supply contracts. A raft of other activities are explicitly excluded, at least for the time being.
But it is a mystery to us how ‘sales-lead generators’ have escaped the net. We don’t believe we are the only consultancy whose clients get calls from firms saying future charge increases can be avoided by contracting now; or that your firm is eligible for a new government saving scheme (when most aren’t); or that rule changes mean you can save 25 per cent on your electricity costs. Misleading claims grab interest. ‘Lead generators’ using them won’t be regulated.
Threading the BICS needle
At the recent BUU Live event, npower pointed out that 96 per cent of businesses are unlikely to be within the scope of the British Industrial Competitiveness Scheme (BICS). We will be doing all we can to get our eligible clients through the application process. Sector and product lists have been published and can be interrogated now, but truly understanding your eligibility will depend on data and evidence. Six months of data is needed to back up an application, so we are already in the data capture period. Publishing guidance later in the year is too late — a number of potential applicants could lose out on the benefits in 2027, and the credit for 2026, purely because they haven’t been given the guidance in time to prepare the data and evidence needed.
Saving 25 per cent on electricity costs
Similarly, if someone tells you electricity is available that is 20–25 per cent cheaper than normal supply, it sounds interesting. Whether it’s called peer-to-peer supply, licence-exempt supply, matched supply or anything else doesn’t matter — a lead has been created. The facts that those savings need to be shared three ways, with a generator and your supplier; that demand is outstripping supply, so generators are claiming a bigger slice of the pie; and that you might only see those savings 18 months or two years down the line are just details.
Help your supply chain
MEUC members are among the most sophisticated energy consumers in the country. You have multiple sources of information and get to grips with our complicated industry. Hopefully, this can also be said of your supply chain. Make sure they are aware that regulation is coming but has loopholes. That a successful application for BICS needs more than just being in the right industrial sector. That the peer-to-peer prize may be smaller than it seems. That reviewing winter evening consumption patterns is worthwhile. Or that investigating what happened in those few hours when demand was much greater than usual could help reduce fixed charges at the site.