Establishing a Charging Transitional Arrangements Group under the Reformed National Pricing programme

What this is about

Ofgem, NESO and DESNZ are setting up a stakeholder group, the Charging Transitional Arrangements Group (CTAG), to advise on whether the upcoming transmission charging reform should apply to everyone from day one or whether incumbents get some form of grandfathering. The call for input is the recruitment exercise for that group, not a substantive consultation on the design itself. Interested parties had until 5pm on 24 March 2026 to register; the document closed on 25 March.

The context is the July 2025 decision to keep a single national wholesale price. That decision killed zonal pricing as the headline reform but left the charging regime as the live lever. If you cannot send a locational signal through the energy price, you can still send one through transmission network use of system (TNUoS) charges and connection terms. The Reformed National Pricing programme is the vehicle for redesigning that charging regime. CTAG is the first stakeholder forum standing up under it, with further Expert Panels promised later in the year on other policy matters. The framing matters: by separating "transitional arrangements" from "design" and starting with the former, Ofgem is signalling that the design will change enough to warrant a serious conversation about who is in and who is out.

Options on the table

The call for input does not enumerate options for the new charging regime itself, but the entire purpose of the group is to thrash out three distributional choices. They are not labelled in the document but they sit immediately under the surface and the responses are being curated to debate them.

Universal application from day one

The reformed charging regime applies to all transmission-connected generators on the start date, regardless of when they connected, what contract type they hold, or what scheme they sit under. Existing CfD, Capacity Market, RO, and merchant generators all face the new charges on the same terms as new entrants.

The winners are new entrants and consumers. New entrants compete on a level playing field rather than against an incumbent base paying yesterday's charges. Consumers benefit if the new regime allocates costs more efficiently, because the efficiency gain accrues across the whole generation fleet rather than only the new-build slice. The losers are incumbent generators whose financial models were built on the existing charging methodology. CfD generators are partially insulated because their strike price absorbs the wholesale exposure, but the change in transmission charges still hits the net revenue line. Merchant and CM generators take the full hit. Nuclear RAB sits awkwardly: the model assumes regulated cost recovery, so a change in transmission charges either flows through to consumers via the RAB or gets eaten by the developer depending on how the RAB is drafted.

Grandfathering of existing contracts

Existing generators continue to pay charges calculated under the legacy methodology, either indefinitely or for a defined window matched to their contract term. New entrants face the reformed regime. This is the model that CfD contracts implicitly assume: the strike price was set against an expected cost stack, and changing that stack mid-contract is a breach in spirit if not in letter.

The winners are incumbents, particularly those with long-dated CfDs and CM agreements, who keep the cost certainty they bid for. The losers are new entrants, who face the full reformed charging regime while competing against an incumbent base that does not. The distortion this creates depends on the gap between old and new charges. If the reformed regime imposes higher locational charges on northern generation, grandfathering protects the existing northern fleet but penalises new northern build, which is the opposite of what the reform is trying to achieve. Consumers also lose to the extent that grandfathering preserves inefficient cost allocations across the largest slice of the generation fleet.

A defined transitional glide path

Existing generators move to the reformed regime over a set number of years, with the charge differential phased in. This is the conventional regulatory compromise: it acknowledges the legitimate expectation of incumbents without permanently exempting them from the reform.

The design choices that matter are the length of the transition, whether the glide path is uniform across all generators or differentiated by contract type, and whether there is a hardship case for early termination of CfDs that become unviable under the new charges. Three years is short enough to preserve the reform's bite but long enough to create financing distortions. Ten years effectively grandfathers anyone with a contract shorter than that. The defensible answer depends on what the reformed charges actually look like and how big the shock is, which is precisely why the group exists. If the eventual design produces only marginal changes in charges, a short transition is unproblematic. If it produces large locational signals, the transition becomes a fight about who bears the asset stranding risk.

The political economy here is straightforward. Concentrated incumbents will lobby for grandfathering. Dispersed consumers and unborn new entrants will not lobby for anything. The composition of CTAG, and specifically whether it weights consumer representatives equally to generator trade associations, will shape what comes out the other end.

Questions being asked

The document does not pose consultation questions in the conventional sense. It is a recruitment notice asking interested parties to register their interest in joining the group, with the questions being asked of registrants rather than of the wider stakeholder community. The substantive questions about transitional design will be discussed within CTAG itself and put to formal consultation later.

Who should be in the room

The call for input identifies four categories of respondent:

- Generators across technology types and schemes (merchant, CfD, Nuclear RAB are named explicitly) - Trade associations - Consumer group representatives - Any other interested stakeholders

The implicit question being asked is: who has skin in this game, and who can credibly represent each constituency? The Capacity Market is conspicuously absent from the named generator categories, which is either an oversight or a signal about how CM holders' interests are being framed. Storage, demand response, and interconnectors are also unnamed, though "any other interested stakeholders" presumably covers them. Anyone with a position to defend should register and have it noted that the named categories did not capture them.

Registration information requested

Registrants are asked to provide information as set out in the "how to register" section of the underlying PDF, which is not reproduced in the web page. From the framing, the questions will cover: the organisation and its market role, the technologies and contracts it holds, the regulatory schemes it participates in, and the basis for its interest in transitional arrangements. The selection criterion is "diverse range of experience, business models, and technology," so respondents should make explicit which constituency they are speaking for and what experience they bring that is not already in the room.

How to respond

The window closed on 24 March 2026 at 5pm. Submissions went to tnuosreform@ofgem.gov.uk with the information requested in the "how to register" section of the call for input PDF (linked from the Ofgem page, 200KB).

For anyone reading this after the close: the substantive consultation on transitional arrangements will follow CTAG's work, and further Expert Panels under the Reformed National Pricing programme are due to be established later in 2026. The deadlines for those will be the consequential ones. Watch for the Expert Panel announcements and for any interim CTAG outputs published by Ofgem, NESO or DESNZ over the second half of 2026.