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A new transmission charging methodology was introduced on 1 April 2005 with the introduction of BETTA. The charges are designed to reflect the long-run costs that generators and suppliers impose on the GB transmission network. These charges are a function of the generator's/supplier's distance from the main centres of electricity demand/generation and the amount of spare capacity on the network locally.
The rationale behind the cost reflective methodology for transmission charging is to ensure that the transmission system is developed efficiently and cost effectively and to provide for an incentive for new generation to locate where there is the most demand. As a result, this will lead to minimise the costs that will ultimately be borne by electricity consumers.
It is National Grid's responsibility as GB System Operator to devise a transmission charging methodology in accordance with the licence obligations to develop and maintain an efficient, coordinated and economical system of electricity transmission and to facilitate competition in the generation and supply of electricity. Ofgem then decides whether to approve the proposed methodology in accordance with the independent energy regulator's duties to promote the interests of consumers (both present and future) and to comply with European law. The Government has no formal role in any of this process. National Grid keeps the GB transmission charging methodology under review.
Further information about the transmission charging methodology is available on the National Grid: Charging Statements webpage.
