Use of System (UoS) or distribution charges cover the cost of operating and maintaining a safe and reliable Distribution network that takes the form of ‘wires and cables’ that transport electricity between the national transmission system and end users such as homes and businesses. Our Distribution network includes overhead lines, underground cables, as well as substations and transformers. In most cases Suppliers are invoiced for the distribution charge, the prices are the same to all energy Suppliers.
We are regulated by the Gas and Electricity Markets Authority (GEMA) and are required to have a licence to operate. The licence sets down how much money we are allowed to recover each year in order to operate and maintain an efficient and economic network.
Use of system charges are set at a level to recover the revenue allowances agreed as part of the price control settlement, determined by Ofgem (Office of Gas and Electricity Markets).
More details about the regulator can be found using the following link: Ofgem website
The charges are calculated using common national charging methodologies that are governed under the Distribution Connection and Use of System Agreement (DCUSA).
More details about the governance process can be found using the following link: DCUSA website
There are currently two methodologies in place, both of which are contained within the DCUSA document:
- The Common Distribution Charging Methodology (CDCM) - the CDCM applies to customers connected at low-voltage (LV) and high-voltage (HV) and is based on a distribution reinforcement model; and
- The Extra-high-voltage Distribution Charging Methodology (EDCM) - the EDCM applies to extra-high-voltage (EHV) designated properties and is based on a long-run incremental cost model (i.e. is forward looking and based on load flow modelling).
These incorporate details of the Price Control Disaggregation Model (PCDM) which is used to calculate the discounts applied to all-the-way charges to determine tariffs for Independent Distribution Network Operators (IDNOs) operating within our area.
We operate under two distribution licences one for Yorkshire and one for the Northeast. We provide a suite of documents to help you understand these charges all of which can be found in the download section.