Drax Energy Solutions’ Post

With recent changes introduced by Ofgem, additional costs are being added to non-commodities, leading to an increase in overall bills going forward. The TCR framework has presented challenges, particularly for businesses struggling to grasp the implications. At Direct Business Group, we offer support with the TCR framework transition and help navigate through the upcoming additional charges. Furthermore, our services include providing analytical data to optimize consumption, aiding in achieving long-term energy objectives for businesses. Feel free to get in-touch martin.pattinson@dbsne.com 07359601890 #EnergyManagement #TCRFramework #BusinessSolutions #AnalyticalData #CostReduction

Transmission Network Use of System (#TNUoS) charges are forecast to rise over 30% from April 2025. This graph summarises the total TNUoS costs and year-on-year movements in TNUoS tariff for a typical Low-Voltage Site Specific Residual Band 2 customer (LVHH RB2). In the recent Five Year View of TNUoS charges, National Grid ESO predicted the tariffs would increase as follows... 👆 32% (£29.76/site/annum) for the average non-locational banded tariffs - this is skewed by the number of domestic customers on the system – the average rise for all business consumers is 33% and the £/site/annum figure varies 👆 19% (£1.26/kW) for the average locational half-hourly (HH) tariff 👆 21% (£0.06p/kWh) for the average non half-hourly (NHH) locational tariff The increase to the non-locational banded tariffs is due to a forecasted £1bn rise to the transmission demand residual revenues. This in turn is driven by greater TNUoS revenues to be recovered in the year. An increase in forecast zonal locational revenues is driving HH and NHH charges higher on average. Customers in the West Midlands and South Wales will see slightly lower locational HH charges based on the forecasts but still face greater TNUoS charges overall. Currently, the ESO forecasts TNUoS tariffs will increase much more slowly between 2025/26 and 2029/30, but several uncertainties exist around the longer-term forecasts.

As the round of tariffs continues in a tit for tat manner, the question is: Do tariffs really work?! I found the answer in a well written paper under the name: Are tariffs bad for growth? Yes, say five decades of data from 150 countries In fact, the paper suggests that for every 3.6% increase in tariff, the economy shrinks by the fifth year by 0.4%. The paper continues to try to rationalize why it doesn’t work: “The estimated decline in output seems related to reduced efficiency in the use of labor across sectors, an appreciation of the real exchange rate which hampers competitiveness (and undercuts possible improvements in the trade balance), higher imported input costs which raise production costs, and intertemporal effects as anticipated tariffs bring forward consumption and output, only to see these macro variables collapse once the tariff is actually imposed.” The question in my mind remains: if there is no scientific data to support the benefit of tariffs, why apply it? The only other reason I can think of is political gain! Those policies usually try to protect industries with big labor force. Coincidentally, we see more tariffs this year as many countries have election year. Or what do you think?

Did you see National Grid ESO's summer update of forecast Transmission Network Use of System (#TNUoS) tariffs to apply for 2025/26 last month? Both the forecast half-hourly (HH) and non half-hourly (NHH) average tariffs have fallen. The ESO reports that the average HH gross tariff forecast has reduced £1.13/kW to £6.64/kW and the average NHH tariff is forecast to dip 0.07p/kWh to 0.30p/kWh. 📉 While the forecast tariffs have decreased slightly, they remain significantly higher than tariffs in 2024-25. 📈 👉 The average tariff is expected to increase by 30.4% based on the latest forecast. This is 2.2 percentage points lower than the average 32.6% expected in the April forecast. Explore our full analysis in our latest Intelligence article: https://lnkd.in/d4ketJgP

💵 Savings for Industry 💵 You may have heard that 'nuisance tariffs' are being removed on nearly 500 HS codes are being removed come 1 July 2024. The effect of this should result in some cost benefits for consumers, if tariff savings achieved by importing businesses of subject goods flow downstream. However, you may not have heard that you can have your say on these proposed tariff changes, with Treasury seeking views from interested parties on the nuisance tariffs selected for removal ahead of finalisation of the list of tariffs (expected in the Budget). Please see more at the link attached (including a list of the Nuisance Tariffs). Should you have any questions, please feel free to reach out.

EPRA has released the 2023 statistics. And key to note is yesterday's discussion on special tariffs. The E-mobility special tariff has been noted to have an increase in the number of electric vehicles. Waiting to see how clean cooking tariff will look like.

How tariffs are felt through personal inflation This chart illustrates how tariffs – which are essentially taxes on imported goods – significantly increased prices for consumers during the last US-China trade war. Here’s what you need to know: 1)  What happened: a. When tariffs were last introduced in 2018-2019 on goods like auto-parts, furniture and electronics, prices for these items rose noticeably. The chart shows that ‘tariff-impacted goods’ became more expensive, while other goods remained relatively stable. 2) Why it matters: a.  70% of the tariff costs had a direct impact on consumers – essentially meaning you paid more at the store. b.  If similar tariffs are introduced this could increase inflation, or stall/reduce the speed of disinflation. 3) Looking ahead: a. Analysts estimate that a 1% increase in the effective tariff rate can raise prices by around 0.1%. Tariffs affect consumers’ wallets directly and also mean businesses could face higher costs. They key takeaway is that although overall tariff impacts on inflation can be more limited, sector or goods specific tariffs can still have a meaningful impact on household budgets and ‘personal’ or felt inflation.

A mini-tutorial on tariffs: I heard that Google searches on tariffs are trending up, a sign that many US voters didn’t know what they were voting for. So, I decided to help. A tariff is a tax imposed by a government on goods or services that are imported from another country. Tariffs are a type of trade barrier that can raise prices, reduce availability of goods & services, and create an economic burden. Governments typically impose tariffs for protection or revenue purposes. The most common types of tariffs are ad valorem (a fixed percentage of the value of the imports) and specific (a fixed amount charged on each unit of an imported good). Tariffs have been used for centuries, but their importance as a source of government revenue has been steadily declining.