Background to changes in DUoS and Capacity charges
There is a drop in electricity fixed charges from 2024/25 to 2025/26.
This is due to a large drop in residual* year on year, which is due to two factors:
There is a large drop in allowed revenue from 2024/25 to 2025/26. 2024/25 allowed revenue was large because it had the inflation catch up which occurred before 2023/24 but was too late to put into 2023/24 prices due to the 15 month notice we provide.
There was also a reduction in allowed revenue for 2025/26 due to tax changes which were announced in Spring 2023 which was in time for setting 2025/26 prices but included updates to 2023/24, 2024/25 and 2025/26 allowed revenue all flowing through in 2025/26.
There was an increase in forward looking charges. This was caused by the zeroing of the customer contributions in the CDCM** model as a result of the access SCR. Therefore the unit and capacity charges increased.
These two factors compressed the residual* causing the reduction in fixed charges.
*Residual is the difference between allowed revenue and forward looking revenue.
**CDCM stands for Common Distribution Charging Methodology. It's a system used in the UK electricity distribution sector to determine how much customers are charged for using the electricity network, particularly at lower voltages. Essentially, it's a method that helps Ofgem and distribution network operators (DNOs) set tariffs for electricity use, ensuring that those who use the network more pay more.
To help you understand the impact of the DUoS and Capacity Charge changes, here’s an example of the annual cost changes for an MPAN with the following details:
DNO - Easter Power Networks
TCR Band - LV Site Specific Band 4
Capacity - 500 KVA
