The UK energy market is undergoing one of its most significant structural changes in decades. Ofgem’s Targeted Charging Review (TCR) is reshaping how businesses pay for electricity network costs, creating winners and losers across the commercial sector.
As the new charging model continues rolling out into 2025 and 2026, many companies will see unexpected changes in their bills — even if their consumption stays the same.
This guide explains what the TCR is, why it matters, and how your business can prepare.
What Is the Targeted Charging Review (TCR)?
The Targeted Charging Review is an Ofgem policy designed to change how businesses pay for the cost of maintaining and developing the UK’s electricity network.
Previously, many network charges were based on when and how much businesses consumed electricity.
TCR changes this approach fundamentally by introducing fixed charges, new business bandings, reduced reliance on peak-time usage and more predictable cost allocation.
The goal is a ‘fairer and more stable’ system — but the financial impact varies significantly by business type.
Why Did Ofgem Introduce the TCR?
Ofgem implemented the TCR for three main reasons: to reduce volatility in network charging, increase fairness by ensuring all users contribute appropriately, and create cost predictability for both consumers and network operators.
Under the old model, some businesses paid disproportionately high network charges simply because of when they operated or how they were connected.
How TCR Changes Charging for UK Businesses
New Banding Structure (from 2025–2026)
Every UK business is now placed into a TCR band. Bands are based on historical electricity demand, connection voltage and meter type (half-hourly or non-half-hourly). These bands determine a fixed annual charge, replacing many variable charges.
Shift from Consumption to Fixed Charges
Before TCR, companies with high usage during ‘red’ peak periods paid significantly more. After TCR, a larger share of charges is based on band allocation and fixed components, and a smaller share is driven by when you consume electricity.
Impact on SMEs vs Large Users
Smaller SMEs may benefit from lower fixed charges compared with the old regime. Large industrial sites, and some multi-site operations, can face significant increases as more cost is allocated through fixed TCR bands rather than time-of-use signals.
DUoS, TNUoS and BSUoS: How They Change Under TCR
- TNUoS Demand Residual Changes: Fixed charges are increasing materially from 2025–2026. Some categories could see the demand residual component nearly doubling across two tariff years.
- DUoS Red/Amber/Green Reform: Peak DUoS charges for red and amber periods are decreasing, while fixed DUoS elements increase under the new model.
- Balancing Costs: Balancing and policy-related charges (including BSUoS and environmental levies) continue to rise due to renewable intermittency and the need for system balancing investments.
How SMEs and Multi-Site Businesses Can Prepare for TCR
- Understand your band allocation: Confirm your band for each site and how it was calculated.
- Improve load factor: Smoother demand profiles tend to fare better under fixed/banded reforms.
- Shift non-essential consumption: Time-of-use still matters; shifting load can still deliver incremental savings.
- Review procurement strategy: Align contract structures and renewal timing with the new non-commodity framework.
How Voltbridge Supports Businesses Through TCR Changes
Voltbridge helps UK businesses by analysing TCR band allocations, explaining DUoS, TNUoS and BSUoS impacts in plain language, and identifying opportunities to reduce charges through better load management and procurement.
We also compare supplier offers under the new charging framework and design procurement strategies that take TCR into account, so you are not surprised by network costs mid-contract.
Conclusion
The Targeted Charging Review marks a major shift in how UK businesses are billed for electricity network costs. As these changes continue through 2025 and 2026, understanding your position and planning ahead becomes critical.
Voltbridge provides expert advice to help businesses adapt to TCR and reduce costs wherever possible. Start your TCR impact assessment today.
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