TCR Banding: A Powerful but Overlooked Way to Lower Energy Costs for UK Businesses
As UK business energy prices continue to fluctuate at historically high levels, companies across the country are under increasing pressure to find reliable ways to
lower energy costs. With government levies, non-commodity charges, and market instability all contributing to rising bills, businesses must now look beyond traditional energy-saving methods to manage their expenses. In previous articles we looked at how to lower
kVA charges, and published a guide on how to lower business energy costs.
One such method gaining attention is TCR Banding - a relatively lesser-known, yet impactful solution for reducing
DUoS and
TNUoS charges.
What Is TCR Banding?
TCR Banding is part of the Targeted Charging Review (TCR), a reform introduced by Ofgem in 2022. Its goal is to ensure a fairer, more consistent system for charging UK electricity users for their share of the grid's maintenance costs -- specifically the Transmission Use of System (TUoS) and Distribution Use of System (DUoS) charges.
Instead of charges being based on when energy is used (which could be manipulated by large users), charges are now fixed and based on how much energy is typically consumed or the agreed capacity. This is where TCR Bands come into play. This leads many businesses ask what is their TCR banding? As, without having previously discussed this with your
DNO, you could be in the dark regarding exactly which TCR band your sites are in.
What Are TCR Bands?
TCR Bands categorise electricity meters into different levels based on their voltage type and agreed kVA capacity. These bands determine the fixed DUoS and TUoS charges applied to a business's energy bill.
For Low Voltage (LV) Half-Hourly Meters:
- Band 1: 0 – 80 kVA
- Band 2: 81 – 150 kVA
- Band 3: 151 – 231 kVA
- Band 4: 232 kVA and above
For High Voltage (HV) Half-Hourly Meters:
- Band 1: 0 – 422 kVA
- Band 2: 423 – 1,000 kVA
- Band 3: 1,001 – 1,800 kVA
- Band 4: 1,801 kVA and above
The higher your TCR band, the more you'll pay in fixed DUoS and TUoS charges, making it essential for UK businesses to ensure their banding is correctly assigned.
Who Assigns Your TCR Band?
Your Distribution Network Operator (DNO) is responsible for assigning your TCR Band. DNOs are regional companies that manage the physical infrastructure delivering electricity to your site. They’re the ones compensated through DUoS and TUoS charges shown on your business energy invoice.
The initial banding is typically based on your historic energy consumption and agreed capacity, but each DNO may have slightly different processes for determining and reviewing your band.
