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Connection Charging Methodology (Transmission)

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title: "Connection Charging Methodology (Transmission)" type: wiki primary-source: /sources/neso/connection-charging-methodology-tx.md tags: [connection-charges, cusc, transmission, neso, shallow, enabling-works] last-updated: 2026-04-12

Connection Charging Methodology (Transmission)

Transmission connection charges are the costs paid by generators, large demand users, and interconnectors for the physical assets linking their site to the National Electricity Transmission System (NETS). The methodology sits in CUSC Section 14 (the Connection Charging Methodology Statement) and CUSC Section 15 (the User Commitment Methodology). NESO administers both; the Transmission Owners design, build, and recover the costs.

What transmission connection charges cover

Connection charges recover the cost of "sole use" assets: infrastructure installed exclusively for and only capable of use by an individual user. In practice this means bay works, cable from the user's site to the nearest NETS substation, switchgear, and civil and land preparation at the connection point.

The annual charge has two components:

  • Capital component: depreciation over a 40-year life plus a 6% rate of return on the Net Asset Value. Users can make a full or partial upfront capital contribution to eliminate or reduce annual capital charges.
  • Non-capital component: site-specific maintenance (SSM, currently 0.38% of GAV per year) plus transmission running costs (TRC, fixed at 1.06% for the RIIO-2 period 2021-2026).

The Transmission Owner sets the Gross Asset Value at construction; it is revalued by RPI annually. Application fees (for the offer-processing work done by NESO and the TO) are charged separately and are set annually in the Statement of Use of System Charges.

The shallow boundary principle

GB transmission connection charging is shallow: connectees pay for sole-use assets only. Any reinforcement of the shared transmission network required to accommodate a new connection is not charged to that connectee. It is recovered from all users through TNUoS (Transmission Network Use of System charges), which are paid by generators and demand users across the country on a zonal basis.

The distinction:

  • Connection assets: non-sharable, sole use; charged to the individual connectee through the annual connection charge.
  • Infrastructure assets: shared, used by multiple parties; recovered through TNUoS.

This is known as the PLUGs distinction (Private Line Use of Plant). The Access SCR (Ofgem Significant Code Review, final decision 2022, transmission implementation April 2025) formally confirmed and codified this shallow boundary in CUSC.

Enabling works: the minimum works a Transmission Owner must complete before a generator can access NETS. Enabling works can include both sole-use assets (charged as connection assets) and shared local assets (charged through TNUoS local circuit or substation tariffs, not as a direct connection charge). The enabling works concept is important because large connection projects often require reinforcement of the local network that, while triggered by the connection, benefits other users too.

Connection offer process

NESO and the relevant Transmission Owner (NGET in England and Wales; SPT or SHETL in Scotland) must offer connection terms to any applicant under the section 16 Electricity Act 1989 duty. The process has five stages:

  1. Pre-application meeting (applicant, NESO, TO)
  2. Application via the NESO Connections Portal
  3. CUSC offer period: 3 months for TO and NESO to assess works and issue a Construction Agreement
  4. Offer review and signing: 3 months for the applicant to accept; security placed within 30 days of signing
  5. Continuous project management via an assigned NESO Connections Contract Manager

The Construction Agreement specifies the Completion Date, Trigger Date (three financial years before connection), and Charging Date. Milestones are contractually binding.

Post-June 2025 (TMO4+): new applications proceed through a two-gate process. Gate 1 screens the application. Gate 2 requires evidence of readiness (planning, land, finance, environmental approvals) before an offer is issued.

The queue crisis and reform

By April 2024, GB had approximately 739GW in its combined transmission and distribution connection queue (510GW transmission, 172GW distribution) against roughly 45GW of peak demand and a 2030 clean power target of approximately 150GW. The queue was around four times the capacity needed for 2030.

The cause was a first-come, first-served process where the financial cost of holding a queue position was far below its economic value. Speculative applications blocked genuinely ready projects.

CMP376 (live November 2023): introduced contractual milestones for all new transmission connection offers and gave NESO the right to terminate agreements for projects failing to progress. This was the immediate precursor to broader reform.

TMO4+ (approved April 2025, live 10 June 2025): the full package of reforms shifting from first-come, first-served to "first ready, first needed, first connect." Existing projects were required to submit Gate 2 readiness evidence (transmission window opened July 2025). Protected projects (connection dates on or before 31 December 2027, with planning consent and FID or CfD/CM agreement) retained their contracted dates. NESO reported the reform released 381.5GW of unready capacity from the queue.

Progression Commitment Fee (PCF): a new charge introduced alongside TMO4+, dormant initially but activatable by NESO if queue health deteriorates. It adds a financial commitment layer above the existing User Commitment cancellation charges.

CMP460 (ongoing): proposes to socialise transmission connection asset costs further and cap individual contributions. At Workgroup stage as of April 2026.

How transmission connection charges differ from DUoS connection charges

Distribution connection charges (governed by DCUSA and the individual DNO connection charging methodologies) are "shallow-ish": the connectee pays for extension assets in full and contributes to reinforcement at their own voltage level, but pays nothing for reinforcement at two or more voltage levels above their point of connection.

Transmission is fully shallow: no reinforcement contribution at any voltage level. The connecting user pays only for sole-use assets.

The security and queue management frameworks also differ:

  • Transmission uses User Commitment under CUSC Section 15 with Fixed or Actual cancellation charge elections, Wider Cancellation Charge based on zonal investment, and the PCF.
  • Distribution queue management is governed by the ENA Queue Management framework (User Guide v6.0, September 2025), with a separate set of milestones and financial instruments under DCUSA.
  • CUSC Section 14 - the full Connection Charging Methodology Statement
  • CUSC Section 15 - User Commitment Methodology (securities, cancellation charges, PCF)
  • Electricity (Connection Charges) Regulations 2002 - the primary SI framework
  • Transmission Licence SLC 14/15 - NESO licence conditions
  • TNUoS - covers wider reinforcement costs not charged to individual connectees
  • DCUSA - distribution connection and use of system charging
  • STC - System Operation Transmission Planning and Coordination Code

Sources: CUSC Section 14/15 (neso.energy), Connection Charges Summary effective 1 April 2024 (NESO), Connection Boundary and User Commitment Final Report November 2019, TMO4+ reform documentation (neso.energy/industry-information/connections-reform).