Minded-to Decision on CMP444: Introducing a cap and floor to wider generation TNUoS charges

What changed

Ofgem has rejected CMP444, a CUSC modification that would have imposed upper and lower limits on the absolute £/kW Peak, Year-Round Shared and Year-Round Not Shared Wider generation TNUoS tariffs. The minded-to position was issued on 10 July 2025 and confirmed in the final decision published 23 October 2025, following 25 consultation responses (four confidential). Ofgem's conclusion was that none of the proposal variants would better facilitate the Applicable CUSC Objectives, and the modification therefore is not made.

The practical effect is that wider TNUoS charges continue to be set by the locational methodology without an administrative ceiling or floor. The most negative (in the north) and most positive (in the south) £/kW tariffs remain whatever the NESO charging model produces in any given year, including the elevated absolute values seen since the 2023-24 step-change in tariff volatility.

What this means in practice

The losers from rejection are generators in high-TNUoS zones, predominantly Scottish wind, which had argued that uncapped tariffs make project finance harder to underwrite and that the signal has overshot its cost-causation justification. The winners are consumers and southern demand-connected generators, who would have absorbed any redistribution required to fund a floor or rebate a cap. By keeping the tariff range open at both ends, Ofgem preserves the full locational price signal: a generator choosing between a Scottish and an English site faces the same nominal £/kW gap as the underlying network cost model says it should.

The mechanism that matters here is cost-causation. Wider TNUoS is meant to charge generators for the marginal transmission investment their location triggers. A cap converts that into a managed price: the regulator decides how strong the signal can get, and any cost above the cap is socialised onto consumers. A floor does the reverse, guaranteeing southern generators do not receive locational payments beyond a set level. Both are administrative overrides on what is, in principle, an emergent calculation. Ofgem's rejection text, that no variant "would better facilitate" the ACOs, is the formal way of saying the locational signal earns its keep even at its current magnitudes.

This sits alongside Reformed National Pricing as the second decision in 2025 where Ofgem has declined to soften locational signals. RNP closed off zonal wholesale pricing; CMP444 closes off a cap-and-floor on wider TNUoS. Read together, they mark the boundary of how far Ofgem is willing to constrain cost-causation pricing in the transmission stack. The CAR Review remains the live workstream where charging methodology is genuinely on the table, and that is where any structural change to TNUoS will originate, not through ad-hoc CUSC modifications.

Three things follow for affected parties:

- TNUoS-liable generators in high-charge zones should not plan around any near-term moderation of wider tariffs. Forecasts published by NESO remain the working assumption for the 2026-27 charging year and beyond. Project finance models that relied on a cap being introduced now need re-running. - Developers siting new projects have a clearer signal that Ofgem will let the locational gradient run. Behind-the-meter and demand-co-located generation in the south remain structurally favoured by the charging regime; northern generation continues to face the unmoderated wider tariff plus whatever curtailment risk applies. - Suppliers and consumer representatives avoid the redistribution that a floor would have implied. The status quo holds: generation pays the locational signal, consumers pay the residual demand-side TNUoS through their bills.

What happens next

No further consultation on CMP444 itself. The modification is closed.

The relevant forward dates are: - CAR Review: Ofgem's Cost Allocation and Recovery Review is the structural workstream. Any reconsideration of cap-and-floor mechanisms or alternative ways of dampening tariff volatility will be raised there, not via a fresh CUSC mod. Industry should watch the CAR Review consultation calendar for the next opportunity to make the argument. - NESO TNUoS publications: Tariff forecasts for charging year 2026-27 will be issued on the normal NESO timetable. Under CMP444 rejection, these forecasts carry their full locational range into final tariffs. - TCMF and CUSC panel: The Transmission Charging Methodology Forum remains the venue where further wider-charge modifications can be raised. Anyone wanting to revisit the cap-and-floor question can lodge a new mod, but the Ofgem signal is clear that the bar to overturn the locational methodology is high.

The decision leaves the door open for the RNP programme to consider similar instruments later if its modelling shows that locational wholesale signals plus locational TNUoS together produce volatility the system cannot absorb. That is a future debate, not a current one. For now, the cost-causation signal stands at full strength.