Understanding TCR bands: What UK businesses need to know

28/05/26

As energy markets continue to evolve, one of the most significant regulatory shifts affecting UK businesses is the ongoing refinement of Targeted Charging Review (TCR) banding. Introduced by Ofgem to create a fairer and more transparent charging system for network costs, TCR has fundamentally reshaped how Transmission Use of System (TNUoS) and Distribution Use of System (DUoS) charges are calculated.

Historically, large energy users could use load?shifting tactics to avoid costly peak?time charges, placing disproportionate network costs on other consumers. TCR sought to close this gap by transitioning from a usage?based model to a fixed?charge system linked to each site’s Available Supply Capacity (ASC). This new model prevents businesses from circumventing charges simply by reducing consumption during peak periods.

Why TCR bands matter

TCR bands determine the level of fixed DUoS and TNUoS charges businesses pay, making them a major driver of non?commodity electricity costs. Each site is placed into a band based on meter type, voltage level, and agreed kVA capacity. For example, Low Voltage half?hourly meters span four bands, from under 80 kVA to above 232 kVA, with higher bands incurring higher fixed charges. The same tiered structure applies to High Voltage supplies, with bandings extending up to the higher threshold of 1,801 kVA and above. As network charges can account for 35% of a commercial electricity bill, correctly assigned banding is critical to cost control.

Who assigns the TCR bands?

Your Distribution Network Operator (DNO) is responsible for assigning and reviewing TCR bands. Band allocation typically reflects your historic energy consumption or agreed supply capacity, though DNOs may vary in their internal processes. Ensuring your ASC isn’t outdated or excessively high is now more important than ever, as inflated capacity agreements push businesses into unnecessarily high fixed?charge bands.

Recent changes and their impacts

The final phase of TCR reforms came into effect between 2022 and 2023, transitioning DUoS, TNUoS and balancing charges into the updated fixed?charge model. For many organisations, this shift has resulted in more predictable billing. However, this hasn’t equated to lower costs. Sites with historically high ASC or inefficient capacity management have seen substantial increases in annual charges. 

Meanwhile, DUoS consumption charges under the familiar Red?Amber?Green model have been reduced, with daily standing and capacity?based DUoS charges rising to compensate. This means businesses that previously benefitted from off?peak energy strategies now face increased fixed charges regardless of behavioural adjustments.

Most recently in April 2026 we saw the introduction of Ofgem’s RII0-3 regulatory framework, which details how operators will fund investment in energy networks through to March 2031, with the primary objective of achieving Net Zero by 2050.  Subsequently, TNUoS charges have seen increases of approximately 60% from April 2026 as part of these new price controls, putting greater emphasis on businesses to ensure their capacity levels are not set too high.   

What you need to do now

With TCR bands now firmly integrated into the UK’s network charging framework, organisations must take a proactive approach:

• Review your ASC: Many businesses operate with capacity levels well above actual demand, leading to inflated banding
• Request a capacity reduction review where appropriate with your DNO
• Verify your assigned TCR band to ensure accuracy, especially if historical data no longer reflects your load profile
• Monitor site expansions or electrification plans, as EV charging and heat electrification may require capacity upgrades that shift your band upward.

As an energy consultancy, IEC has the expertise to review your ASC and ensure that this and the relevant banding, are set at the correct level.  Due to our relationships with the relevant parties, we are able to action any required amendments in a speedy manner, to allow customers to receive the maximum savings available.  TCR banding should be seen as a strategic energy cost lever. By actively managing capacity and validating band assignments, you can avoid unnecessary charges and position yourself for better energy resilience in a rapidly changing market. To discuss this further contact IEC: www.innovativeenergy.co.uk/contact/