2026's distribution tariffs reveal significant rises and falls depending on region

Ofgem granted delays to four of the distribution charging regions, allowing them time to tackle issues with the DUoS charging models. Due to actions the DNOs have had to take, these regions will see some of the most significant year-on-year differences in DUoS (as we’ll come on to).

For our “typical” customer¹, the highlights are:

• The arithmetic average DUoS across all regions will barely change, increasing by only 0.4%, or £26/year.
• DUoS will see a 60% rise in the London region, driven by an increase in the capacity charge, and a 37% decrease in the North West, driven by a drop in both fixed rates and unit rates.
  ο For context, this would be a £1.5k increase and a £2.5k decrease year-on-year respectively, adding £9.47/MWh for the customer type in London and removing £16.64/MWh from DUoS in the North West
• The fixed charges have changed significantly but vary in direction and magnitude across regions, ranging from a 137% increase in the South East to a 100% reduction in the North West and Northern Scotland, leaving these two areas with a zero fixed charge.
• The green unit rate charge decreased for most regions, seeing an average 19% reduction across all 14 areas.

¹ All comparisons, unless stated otherwise, are for a Low Voltage Site Specific Residual Band 2 (LVSS RB2) customer of 162MWh EAC, 10/42/47 red/amber/green split, with an import capacity of 122kVA (based on the average EMEB LVSS RB2 customer).

Divergence

DUoS increased on average by 0.4% year-on-year across the regions, but there’s a lot of variation between them. London has the greatest increase of 60%, driven predominantly by a more than doubling of the capacity charge, despite a significant decrease in its fixed cost. The impact of the capacity charge means this will vary between a 37% increase for high load factor consumers and 75% for low consumers. The North West has the greatest decrease of 37%, largely due to slashing the fixed cost to £0.00 as well as significant reductions in the amber and green rates.

Fixed costs have seen significant changes this year, ranging from an increase of 137% in the Eastern region to decreases of 100% in three other areas. Accordingly, the North West, Northern Scotland and Southern regions will all have a fixed charge of £0.00 for this customer type from April 2026. The figure below shows how the fixed charge has changed for different regions.

Aside from London (+104%), Southern (+32%), and North West (-17%), the year-on-year change in capacity charges is expected to be relatively minor for most regions.

Unit rates will be more of a mixed bag. We’ll see significant reductions across the board in the North West region. Many other regions will also charge less for off-peak consumption in 2026. However, red peak charges are expected to grow significantly in a number of regions, including Yorkshire (+30%), North East (+20%), Southern (+18%) and Eastern (+17%). This means different consumers could see markedly different impacts, depending on their consumption profiles.

For the regions with the more significant changes in year-on-year DUoS, we expect different customer types to experience similar patterns to our typical customer. A high voltage RB2 customer (HVSS RB2) and a Non-Domestic Aggregated or CT Residual Band 2 (NDA RB2) customer also see the increases/ decreases outlined for the LVSS RB2 customer.

Delay

While most DNOs followed the typical 2026/27 DUoS charging publication schedule, several requested derogations from Ofgem to publish their charges later. This was due to anticipation of an excessive residual surplus from either one, or both, of the charging models that set the DUoS tariffs.

Put simply, this means the residual charge (which is added onto the fixed p/day component of DUoS) was so negative the figure would go below zero and become a credit. Ofgem considers it inappropriate for network companies to pay consumers for their connection to the system, and so the surplus residual needs to be allocated elsewhere. Ofgem was aware of this challenge ahead of the charging round and therefore, in November, outlined guidance on how to manage it.

The regulator issued Electricity North West (ENWL) and UK Power Networks (UKPN) with a derogation from the charging model for low and high voltage charges only, for the Northwest and London regions respectively. This includes reducing the value of the Distribution Reinforcement Model (DRM) so the forward-looking charges recover a particular value (i.e. to a point where the residual surplus is at a level that allows production of a complete set of tariffs). Ofgem issued Scottish and Southern Electricity Networks (SSEN) a derogation from both charging methodologies, for both the regions it covers: Northern Scotland and Southern. The derogation offered various ways to alter the charging methodologies, including reducing the value of the DRM, using previous years’ locational components, and applying negative residuals to capacity charges. These were only applicable to certain regions or charging models.

So what?

We recommend energy consumers take note of the direction and magnitude of the DUoS cost movement in their region. The actual impacts will vary based on user type and consumption profile, so consumers should review the impacts on their site or portfolio of sites to support a budgetary assessment for the 2026-27 charging year.