The Transmission Pricing Methodology (TPM) provides for a customer’s initial residual charge (when the TPM first takes effect) to be adjusted to accommodate circumstances where a customer has experienced a substantial reduction in its demand prior to the TPM coming into effect. This is called a reduction event. The TPM provides for an adjustment factor, which needs to be calculated using the reduction event adjustment factor (REAF) formula. 

We amended the formula in November 2022, as it was not working correctly (an issue raised by Northpower). However, the formula in the November amendment included errors, that would result in adjustments that differ from the policy intent.

The urgent amendment corrects the formula, ensuring the reduction event works as intended, consistent with the purpose of the changes made in November 2022.

The Authority is making this urgent Code amendment, under section 40 of the Electricity Industry Act 2010, to ensure it is in force for the 1 April commencement of the new TPM. We intend to progress a permanent amendment in May 2023.