Draft tariffs suggest an average two thirds increase in TNUoS from April

Draft tariff movements

TNUoS comprises two components; a fixed “residual” charge (the vast majority of the cost) and a time of use element. The latter varies by location and between half-hourly (HH) and non-half-hourly (NHH) customers.

On average, for distribution connected customers, fixed TNUoS costs are forecast to rise by 64% next year, based on the draft tariffs. However, this hides significant variation between a 41% increase for the low voltage residual band 3 (LV3) customer to a 104% rise for the extra-high voltage residual band (EHV1) customer. Forecasts for transmission connected sites see even greater variation, ranging from a 29% increase for residual band 2 customers, to a 118% increase for those in residual band 1.

We’ve outlined the forecast annual fixed costs, and the comparative movement to 2025-26 tariffs, below. Please note the logarithmic scale on the left-hand y axis.

In contrast, NESO forecasts the locational time of use component to fall across all regions except those in the very south of Great Britain. This reflects generation and demand forecasts across different parts of the transmission network. The increase in the South Western region is driven by a rise in demand, especially at peak, with no concurrent climb in generation to reduce its impact.

We outline the tariffs and their movement compared to 2025-26 tariffs below.

In January 2026, NESO will publish the final tariffs confirming TNUoS charges for 2026-27.

Interaction with the price control

TNUoS recovers the revenues for a range of transmission-related activities. However, by far the single largest component is the revenues for the onshore transmission owners (ONTOs). These entities are price controlled, and Ofgem has recently concluded its review of the allowed revenues ONTOs can make. The RIIO Electricity Transmission 3 price control will run from April 2026 to March 2031, and the allowed revenues are therefore essential inputs into determining the TNUoS tariffs for 2026-27.

This has resulted in uncertainty. NESO’s draft determinations, published in July, suggested the fixed TNUoS tariffs would near double for many users. This is because the transmission networks need a significant upgrade to support the country’s clean power ambitions. However, the Final Determinations, published by Ofgem on 4 December, provided for a combined decrease (compared to the Draft Determinations) of around £1.25bn in allowed revenues for 2026-27 across the ONTOs. This resulted in an approximate fall of 20% in fixed TNUoS in the draft tariffs compared to the earlier projections, although the actual percentage change varies significantly by customer type.

You can read more about the final determinations here or view our analysis of NESO’s Five Year View here.

Separately, the residual charging bands that determine which charging band consumers fall within is changing from 1 April 2026. We advise customers to check the movements in banding to support their understanding of the potential impacts on their energy costs over the next five years.

Disclaimer

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