Historically, changes in non-energy costs have tracked inflation rising by c.3% year-on-year, based on CBRE analysis. We anticipate c.10% increase in April 2023, and although the Government has removed certain green levies as part of the calculation for setting the price cap, the impact will be dwarfed by inflationary uplifts.
We're talking to our property managers about the recently concluded Targeted Charging Review (TCR). The changes invoked mean that the cost of maintaining the network which used to be built into unit rates, are now collected as part of the standing charge. Historically, large consumers would attempt to shift consumption to off-peak (cheaper) supply periods, however there’s limited financial benefit in doing so since the changes. CBRE is helping clients review TCR thresholds to minimise the cost impact incurred, but this is a more difficult and less financially beneficial process than load shifting.
Lastly, we’re advising our clients and site teams that the costs of balancing the network, where supply doesn’t meet demand are also on the up. Mainly caused by the sporadic usage patterns seen during lockdown, and now as price increases force consumers to reduce their demand, the costs of balancing the network have soared. OFGEM had introduced a cap on these costs to limit the impact, but this cap has recently been increased.