Managing the effects of surplus residual charges: derogation requests and directions
Decision
- Publication date
- Industry sector
- Distribution Network
- Supply and Retail Market
- Generation and Wholesale Market
These are our directions to manage excessive residual surplus in DUoS charging methodologies. We have developed them through our call for input and they follow the Managing the effects of surplus residual charges guidance.
Derogation requests from the DCUSA 15-month Notice period and our resultant directions
The requests are part of what we ask Distribution Network Operators (DNOs) to do to manage the effects of surplus residual charges.
About the derogation requests
We asked DNOs to request derogations against the 15-month notice period when they identify a risk of an excessive surplus residual. This relates to Distribution Use of System charging methodologies.
This was to allow time for DNOs to:
- confirm the presence of an excessive residual surplus in their charging methodologies
- apply the relevant intervention option
- produce an impact assessment
- submit a request to derogate against the DCUSA charging methodology to Ofgem
View the requests to derogate from the DCUSA 15-month notice period and Ofgem decisions on this page.
Derogation requests from the DUoS charging methodologies
The requests are part of what we ask Distribution Network Operators (DNOs) to do to manage the effects of surplus residual charges.
About the derogation requests
We asked DNOs to request derogations against the relevant charging methodologies if they identify an excessive negative residual. This relates to either or both charging methodologies.
We asked that requests included:
- confirmation of the presence of an excessive residual surplus in their charging methodologies
- confirmation of the applied intervention option
- impact assessment
Impact on LDNOs
Allowing Distribution Network Operators to deviate from their 15-month notice period impacts Licensed Distribution Network Operators (LDNOs) operating within those areas.
Because of this, we have directed LDNOs to deviate from the 14-month notice period for setting Distribution Use of System charges. This will enable them to publish their final DUoS charges for the charging year 2026 to 2027 in areas affected by an excessive surplus residual.
This direction is solely a result of the instructions we have already issued to 3 DNOs, permitting a delay in the publication of their charges. You can view the LDNO directions on this page.