Open letter: Our approach to prioritisation of electricity transmission network charging modifications

What this is about

Ofgem is signalling that it will no longer treat the CUSC Modification Proposal queue on TNUoS as a first-in-first-out conveyor belt. Too many CMPs touch the same parts of the methodology, and several are either contingent on or contradicted by others. Rather than decide each in turn and risk inconsistency, Ofgem will sequence its decisions and work with the CUSC Panel on which proposals should advance through industry development in what order. The stated objectives are stability in the regime, preservation of locational signals, and predictability of charges.

The letter is procedural in form but substantive in effect. By choosing what to decide first, Ofgem chooses what the methodology looks like when later proposals land on its desk. A CMP decided in isolation sets the baseline against which the next is assessed. The sequencing decision is therefore a decision about the shape of TNUoS reform, made without the consultation requirements that would attach to a substantive methodology change. It arrives between the rejection of CMP444 and the live Reformed National Pricing (RNP) workstream, both of which it is plainly designed to accommodate.

Key points

Locational signals are the priority Ofgem is naming. The letter explicitly lists "retention of locational investment signals" as a sequencing objective. That language locks in a position: TNUoS reform should not, through cumulative parameter changes, end up flattening the locational charge. Any CMP that would erode the locational signal can expect to be deprioritised or held until proposals that preserve it have been settled.

Stability and predictability are doing real work. These are not throwaway adjectives. They translate into a presumption against rapid sequential change to the same component of the methodology. Where CMPs interact, Ofgem will pick the one that anchors the regime and let others be reassessed against the new baseline. Developers and investors who have been pricing in volatility on TNUoS charges should read this as Ofgem trying to dampen the rate of methodology drift, not the absolute level of charges.

The CMP444 rejection is the unspoken context. CMP444 would have replaced the existing TNUoS approach with a new methodology and was rejected in late 2024. The open letter does not name it, but the sequencing logic is straightforward: with the substantive replacement off the table, Ofgem must manage the smaller in-flight CMPs that would otherwise reshape TNUoS by accumulation. Sequencing is the tool for preventing piecemeal reform from achieving what the rejected wholesale reform could not.

RNP is the live thread. The Reformed National Pricing review is the workstream Ofgem and DESNZ are actually using to consider structural change to wholesale and network charging. By holding the CMP queue in a deliberate sequence, Ofgem keeps the methodology stable enough for RNP analysis to proceed against a known baseline. Any CMP that would materially move TNUoS while RNP is in flight is, by implication, a candidate for deferral.

The CUSC Panel is being pulled in. Ofgem says it will "work with the CUSC Panel on the prioritisation of proposals still in the industry-led process." That is unusual. The Panel runs the industry stage; Ofgem decides at the end. Inviting the Panel to sequence the industry pipeline shortens the feedback loop between regulator priorities and industry development effort and reduces the risk of Ofgem receiving a CMP it has already decided to deprioritise.

No new consultation, no statutory instrument. This is an open letter, not a decision document. There is no formal change to the CUSC process and no new legal instrument. The mechanism is administrative: Ofgem adjusts its own decision-making timelines and invites the Panel to do the same on its side. The constraint on developers is therefore informational rather than legal: the queue is real, but its order is now opaque until Ofgem announces a specific sequencing decision.

What happens next

Watch for three signals in the coming months. First, an Ofgem-Panel statement on which in-flight CMPs are being deprioritised and which advanced. Without that, the letter is intent without effect. Second, the next RNP milestone, which will indicate whether TNUoS sequencing is being held in service of broader market reform or stands on its own. Third, any CMP decision that arrives out of submission order, which is the operational evidence that the sequencing approach is live.

For developers with siting decisions in flight, the practical implication is that TNUoS exposure should be modelled against the current methodology as the stable case for the next 12 to 18 months. Locational charges are unlikely to flatten in that window; if anything, the letter signals that proposals to preserve or strengthen the locational signal will move first. Behind-the-meter and co-located options that bypass TNUoS exposure remain the cleaner hedge against methodology risk, but the immediate risk has fallen, not risen.

For policy watchers, the sequencing letter is worth more than it appears. It is the operational answer to the rejection of CMP444 and the procedural counterpart to RNP. The next time Ofgem rejects or accepts a TNUoS CMP, the reasoning will rest on a baseline that this letter has quietly chosen.