Decision on urgency treatment of CMP430: Adjustments to TNUoS Charging from 2025 to support the Market Wide Half Hourly Settlement (MHHS) Programme

What this is about

Ofgem has granted urgency status to CMP430, a CUSC modification that adjusts how Transmission Network Use of System (TNUoS) charges interact with Market-Wide Half-Hourly Settlement (MHHS). The urgency designation means CMP430 bypasses the standard modification timeline and moves to accelerated decision, reflecting the fact that MHHS implementation is already underway and the charging framework needs to be ready before the settlement changes go live.

TNUoS is the single largest component of network charges — roughly £3.5bn per year, split between generation (approx. 27%) and demand (approx. 73%). The current TNUoS demand charging methodology was designed around a world of non-half-hourly (NHH) settled customers, where suppliers are charged based on their share of demand during the three winter peak half-hours (the Triad system for transmission-connected demand) or through banded tariffs for lower-voltage customers. MHHS fundamentally changes this by moving all demand to half-hourly settlement, which means the existing NHH demand tariff structure needs to be adapted or it will produce incoherent charging outcomes.

Key points

The urgency case is about timing, not controversy. Ofgem agreed with the CUSC Panel that CMP430 meets the urgency criteria. The standard CUSC modification process takes 6-12 months. MHHS migration is already in progress, with full implementation targeted for October 2025. If TNUoS charging is not aligned with half-hourly settlement by then, suppliers face a period where the settlement basis and the charging basis are mismatched — creating reconciliation problems and potential cost allocation distortions.

TNUoS demand charges need restructuring for a half-hourly world. The current system splits demand customers into two broad categories: half-hourly (HH) settled customers who pay locational and residual charges based on metered half-hourly data, and non-half-hourly (NHH) settled customers who pay through simplified banded tariffs. Once MHHS eliminates the NHH category entirely, the banded tariff structure has no settlement basis to sit on. CMP430 addresses how to transition the charging methodology so that it works with universal half-hourly data.

The risk is unintended cost shifts. When you change the basis on which £3.5bn of charges are allocated, even small methodological choices can move significant sums between customer classes. The key tension: TNUoS residual charges (the non-locational portion) are currently allocated partly through the banded tariffs, which act as a rough proxy. Moving to actual half-hourly data could shift residual cost recovery between customer groups — particularly between domestic and commercial customers — depending on how the methodology handles the transition.

Locational signals are the prize, but also the risk. One of the theoretical benefits of MHHS is that it enables sharper locational and temporal price signals for all customers, not just large HH-settled ones. If CMP430 is well designed, it could allow TNUoS demand charges to better reflect when and where customers draw power, reinforcing the economic case for demand flexibility. If poorly designed, it could blunt these signals by defaulting to flat or averaged charges that preserve the revenue allocation status quo without capturing the informational value of half-hourly data.

Urgency limits consultation. The practical consequence of urgency treatment is a compressed timeline for industry engagement. Standard CUSC modifications include a formal consultation period and workgroup process. Urgency treatment shortens or eliminates these steps, which means the detailed methodology choices within CMP430 will receive less scrutiny from affected parties before Ofgem decides. For a modification that affects how the largest network charge is allocated across all demand, this is a material trade-off.

What happens next

CMP430 now follows the urgent modification process under CUSC governance. NESO (as CUSC administrator) will develop the modification proposal and any alternatives on an accelerated timeline, with Ofgem making the final decision.

The key dependency is MHHS itself. The programme's October 2025 target has already slipped from earlier milestones, and further delays would ease the urgency pressure on CMP430. But Ofgem is treating the current timeline as firm, which means the charging changes need to be decided and implemented well before the settlement switchover.

Industry participants — particularly suppliers with large NHH customer bases — should track the CMP430 workgroup outputs closely. The methodology choices on residual charge allocation will determine whether MHHS produces genuine improvements in cost-reflective charging or simply reshuffles the same revenue requirement onto a new settlement basis. The compressed timeline means the window for influencing the outcome is narrow.