Under the TCR, different types of customers are classified into different TCR bands. These bands determine how much customers pay for their electricity distribution costs, depending on the level of demand or the type of supply arrangement. The aim is to ensure that those who consume electricity in a way that requires more resources from the network (e.g., larger or commercial properties) are charged fairly for the impact they have on the grid.
For domestic residents living in apartments that are fed by a commercial meter, they may not be on the same TCR band as individual residential properties. This could mean that the charges for electricity supply and distribution could be higher due to the nature of the commercial supply, which is designed to meet the demands of businesses, not individual households.
One of the most important impacts of the TCR for residents in such apartments is that it may lead to an increase in the standing charge. The standing charge is a fixed daily fee that customers pay to cover the costs of supplying electricity to their homes, including meter reading, maintenance, and other fixed operational costs.
As per Ofgem’s reselling regulations, when a landlord, property manager, or other intermediary resells electricity to domestic residents, the charges must be based on the actual cost of the energy supply, including any standing charge adjustments. These charges cannot exceed the wholesale cost of energy and the associated distribution and supply costs.
In practice, this means that domestic residents living in an apartment building supplied by a commercial meter might experience changes to their billing structure due to TCR banding. The reselling charges must reflect these changes, and in many cases, residents might see an increase in their standing charge due to the TCR.
In summary, the Targeted Charging Review and TCR banding aim to create a fairer system for electricity distribution costs, but for domestic residents in apartments served by a commercial meter, this could lead to higher standing charges. These charges will be based on the commercial supply and consumption profile.
