Third party and industry charges

March 2024

RO Mutualisation 21/22
21/22 has mutualised and will be passed through on Apr-24 invoices for Mar-24 consumption. The Mutualisation Rate for this period is 0.04815p/kWh

RO Mutualisation 22/23
RO Mutualisation was NOT triggered for Apr-22 to Mar-23. This will appear as a line item on Apr-24 invoices for Mar-24 consumption, with a net zero impact on customers.

FiT Levelisation 22/23
This was deferred from Q4-23 into Q1-24. This will appear on Apr-24 invoices for Mar-24 consumption.

November 2022

There has been a Balancing Services Use of System (BSUoS) settlement issue this month which has led to the delay of the initial reconciliation for September 2022 consumption. We continue to await information from National Grid ESO, but now expect to undertake initial reconciliations for both September 2022 and October 2022 consumption in December 2022.

May 2022

Due to delayed generator payments received by the Low Carbon Contracts Company (LCCC) for Contracts for Difference (CfD), reconciliation for January to March 2022 consumption will be undertaken as part of July 2022 invoicing activity.

February 2022

Due to CMP381 BSUoS cap of £20/MWh introduced as of 17/01/2022 to defer exceptionally high Winter 2021/22 BSUoS costs to 2022/2023, there will be a cap introduced to BSUoS reconciliations for Jan22 to Mar22 consumption. Please refer to National Grid website for further information on CMP381 or for access to SF data.

January 2022

Due to an EMR Settlement issue with the Contracts for Difference (CfD) Green Excluded Electricity (GEE) volume reconciliation for January to March 2021 consumption, the Low Carbon Contracts Company (LCCC) volume data is under review and will not be available in time for us to reconcile through the January invoicing cycle as planned. As such, we will now undertake the GEE volume reconciliation as part of April 2022 invoicing activity.

Furthermore, there has been an issue raised with LCCC rates for CfD quarterly reconciliation for October to December 2021 consumption. We continue to await information from LCCC, but now expect to undertake initial reconciliations in April 2022.

December 2021

As per previous commentary, customers with Balancing Services Use of System (BSUoS) pass-through agreements will be reconciled for both September and October actuals through December’s invoicing run. Additionally, customers who take Contracts for Difference (CfD) pass-through will be reconciled the initial CfD quarterly reconciliation for 1 July 2021 to 30 September 2021 consumption. The Green Excluded Electricity (GEE) volume reconciliation will also take place for the period 1 October 2020 to 31 December 2020.

November 2021

Due to an EMR Settlement issue with the Contracts for Difference (CfD) quarterly reconciliation in October, the Low Carbon Contracts Company (LCCC) did not publish initial cost and volume data in time for us to reconcile through the November invoicing cycle as planned (for July to September 2021 consumption). As such, we will now undertake the quarterly reconciliation as part of December’s invoicing activity.

Furthermore, there has been an additional Balancing Services Use of System (BSUoS) settlement issue this month which has led to the delay of the initial reconciliation for September consumption. We continue to await information from National Grid ESO, but now expect to undertake initial reconciliations for both September and October consumption in December.

What is Capacity Mechanism (CM)?

CM is an Electricity Market Reform (EMR) mechanism to help the UK meet its carbon reduction targets and ensure security of electricity supply. It is designed to make sure there is sufficient power available to meet future needs. It operates as an annual auction, which started in December 2014, to procure the majority of the UK’s required energy capacity four years in advance. There is a top-up auction one year ahead of delivery to enable Demand Side Response (DSR) to participate. The cost of running the CM is passed through to consumers.

How CM is charged

For both Half-Hourly (HH) and Non Half-Hourly (NHH) the cost will either be fully passed through (with subsequent reconciliation) or fixed into unit charges
CM is made up of two elements, Obligation Costs and an Operational Cost Levy:

Obligation Costs

• Obligation Costs reflect the costs of the capacity auctions and are charged on consumption during the winter peak period; from 16:00 and 19:00 on working days between November & February. In order to estimate CM charges, an Estimated Annual Consumption Volume (EACV) will be calculated in kWh. This is the expected volume at National Balancing Point (NBP) for the Meter Point Administration Number (MPAN) across the winter peak period.
• Obligation Costs will initially be charged using a forecast price and the EACV, and applied to each invoice period throughout the year. In order to do this the EACV is divided by the number of days in the year, then multiplied by the number of days in the invoice period. The resultant volume is multiplied by the forecast Obligation Levy price.
• Obligation Levy costs will then reconciled for pass through contracts using actual consumption and price once known.

Operational Costs

• Operational Costs Levy reflects the running cost of the scheme and are set by the Electricity Settlement Company (ESC). This is a fixed unit rate per kWh for each 12-month period.

CM rates:

What is Contracts for Difference (CfD)?

CFD is an Electricity Market Reform (EMR) mechanism to help the UK meet its carbon reduction targets and ensure security of electricity supply.

The CfD charge is designed to support investment in new low-carbon generation, with a technology-dependent fixed price known as the 'strike price' (wholesale price + top-up subsidy). CfD costs will vary annually due to wholesale price fluctuations and amount of CfD generation produced in each year. Costs are met by a levy applied to energy suppliers, which are then passed on to consumers.

How CfD is charged

For both Half-Hourly (HH) and Non Half-Hourly (NHH) the cost will either be fully passed through (with subsequent reconciliation) or fixed into unit charges

CfD is made up of two elements, Supplier Obligation Cost and Operational Cost Levy. These are combined into one price calculated against the National Balancing Point (NBP) consumption for each individual MPAN The Supplier Obligation Cost reflects the amount of low-carbon electricity funded by the scheme. It reflects the subsidy paid to each CfD generator based on volume of energy generated and prevailing wholesale electricity costs.

The Operational Costs Levy reflects the running costs of the scheme set by the Low Carbon Contracts Company (LCCC).

A forecast rate will be applied to each invoice period for pass through contracts and reconciled once actual prices are known in accordance with the Settlement Calendar.

Green Excluded Energy (GEE)

GEE is a supplier level exemption that is not known until at least 6 months after the end of the quarter. This results in a further reconciliation being calculated and confirmed for each quarter. An estimate of GEE volume is included in the initial CFD forecast rate and, as of October 2021, will be applied to the quarterly reconciliation numbers provided by Low Carbon Contract Company (LCCC).

CfD charges (p/kwh) including Operational Rate

What is the Renewables Obligation (RO)?

The Renewables Obligation (RO) is a UK government scheme to support the development of large-scale renewable energy generation, in order to help meet the UK’s climate change objectives. It was introduced in 2002 but closed to all new generation contracts at the end of March 2017, and was replaced by the Contracts for Difference (CfD) scheme. Existing RO contracts will continue to run until 2027. The RO is funded by suppliers, with costs then recouped from consumers.

How RO is charged

RO can either be charged as a pass-through cost which will appear as a separate line item on invoices, or consolidated in the overall unit rate customers pay. Both these options are available to Half-Hourly (HH) and Non-Half Hourly (NHH) customers.

Forecast RO rates for pass through contracts are based on the published Buy Out Price and Obligation Level. npower Business Solutions (nBS) reserves the right to re-forecast pass-through levels in line with any RO shortfall/expected mutualisation impacts and will reconcile to actual costs once known.

RO pass-through rates:

What is the Feed-in Tariff (FIT)?

Feed in Tariff is a government scheme designed to support small-scale renewable generation in businesses and homes. It was launched in 2010 and offers an index-linked payment for every kWh of energy produced for a 10-25 year period, with different rates for different technologies. It is funded by suppliers based on market share, with costs then recouped from consumers. The scheme closed to new entrants from 1 April 2019.

How FIT is charged

FIT can either be charged as a pass-through cost which will appear as a separate line item on invoices, or consolidated in the overall unit rate customers pay. Both these options are available to Half-Hourly (HH) and Non-Half Hourly (NHH) customers.

Costs for pass through contracts are not known up front so are initially estimated for each FIT year (1 April to 31 March). There will be a reconciliation performed during the October to December quarter after a FIT year has ended and the actual costs are known.

FIT pass-through rates:

1. Initial billing rate based on internal forecast of cost
2. Reconciliation based on annual FiT levelisation
3. Potential reconciliation reserved for extreme industry event such as settlement errors/data issues/mutualisation.

Annual (FIT) Feed In Tariff Levelisation

The Annual (FIT) Feed In Tariff Levelisation has been deferred from November 23 until Q1 2024

Find out more about FiT:

• Recent changes to FiT billing process