![]() ![]() National Grid ESO (NG ESO) has published its winter outlook which gives an early view of anticipated electricity supply margins covering the period from 31 October 2022 to 31 March 2023. The cap will cease to apply after 1 April 2023, at which point BSUoS charges will no longer be recovered from suppliers and generators and will instead be levied solely from final demand (being electricity that is consumed other than for the purposes of generation or export on to the electricity network). Against the backdrop of the energy crisis, generators and suppliers had been finding that the high BSUoS charges were adding increasing risk and cost to their commercial activities. The cap was originally proposed in August 2022 and Ofgem recently decided to treat this as an urgent request as a result of the spiralling BSUoS charges. Although a £15/MWh or £25/MWh charge is considered high, it is not so high as to be reasonably unforeseeable, and capping it at a lower level could lead to the £250 million maximum deferred cost being met much faster than if the £40/MWh cap is imposed. It said that the cap is designed to kick in where the BSUoS charge is so high that it could not reasonably have been foreseen by those paying it. Ofgem has defended its approval of a £40/MWh cap, which is significantly higher than the £15/MWh or £25/MWh limits which were originally suggested. The cap has been set at £40/MWh, with the maximum deferred cost being £250 million. The cap came into effect on 6 October 2022 and will remain in place until 1 April 2023. Ofgem has approved a cap on Balancing Services Use of System (BSUoS) charges to combat the fluctuating and increasing charges that generators and suppliers are facing as a result of the energy crisis. Ofgem announces temporary cap on BSUoS charges When the scheme ends in March, the government said that it will implement further support for "vulnerable" businesses, including those in the hospitality sector. Wholesale energy prices will be discounted to £211 per MWh for electricity and £75 per MWh for gas. Similarly to the price guarantee for domestic customers, the scheme will only last for six months, but it will be backdated to apply to any contracts that were signed since 1 December 2021. More details for the non-domestic energy customer subsidy scheme were announced on Tuesday. The bill also introduces measures which enable the domestic and non-domestic customer energy price reduction schemes, promised by the government in recent weeks, to take effect. Read more about what the bill might mean for the revenues of these generators in this Insight. One of the schemes is the creation of a cost-plus-revenue scheme for renewable and nuclear generators. The bill aims to deliver the various announcements made by the government over the last six weeks in response to the energy crisis which include limiting the prices paid by domestic and non-domestic energy users. ![]() On Thursday 13 October, the UK government published the text of its new Energy Prices Bill with the aim of ensuring that consumers "pay a fairer price for their electricity". ![]() UK government publishes Energy Prices Bill This week we look at the newly published Energy Prices Bill, the approval by Ofgem of a cap on BSUoS charges and NG ESO's outlook for the coming winter. ![]()
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