Ofgem published a Call for Input in February 2023 on proposed updates to the Typical Domestic Consumption Values (TDCVs), the industry standard figures for the annual gas and electricity usage of a typical domestic consumer1. The regulator proposes that the new values be used from 1 October 2023 and aims to announce a final decision in April 20231. Comments are invited by 27 March 20231.
The TDCVs are used to derive the typical bills quoted in price cap and Energy Price Guarantee (EPG) updates, and are commonly used by suppliers and price comparison websites where a customer's actual annual consumption is not known1. They were first established in 2003 by Energywatch, and Ofgem put a framework in place in 2013 for reviews every two years, revising the values where the latest data produces materially different figures, meaning changes of at least 100 kWh for electricity and 500 kWh for gas when rounded1. The 2021 update was postponed because of the COVID-19 pandemic1.
The proposed revised values, alongside the current ones, are set out below1.
| kWh | Current TDCVs | Proposed revised TDCVs |
|---|---|---|
| Gas Low | 8,000 | 7,500 |
| Gas Medium | 12,000 | 12,000 |
| Gas High | 17,000 | 17,000 |
| Electricity Profile Class 1 Low | 1,800 | 1,800 |
| Electricity Profile Class 1 Medium | 2,900 | 2,800 |
| Electricity Profile Class 1 High | 4,300 | 4,200 |
| Electricity Profile Class 2 Low | 2,400 | 2,200 |
| Electricity Profile Class 2 Medium | 4,200 | 4,000 |
| Electricity Profile Class 2 High | 7,100 | 6,900 |
Ofgem has also proposed a revised Economy 7 consumption split of 60 per cent peak and 40 per cent off-peak, based on November 2022 settlement data, replacing the 58/42 split based on 2017 data1. A 59/41 split was proposed in 2019 but was not adopted because the change was not considered material1. Ofgem said the 58/42 split is reflected in price cap requirements, and that if the review changes it, it intends to consider whether to amend the licence accordingly1.
"This Call for Input provides stakeholders with the opportunity to comment on our proposal to update the gas and electricity TDCVs and the estimate of the average peak/off-peak split used to calculate the typical bill for an Economy 7-meter type."
Ofgem said a revision to the TDCVs will not change the price cap or EPG values, because both cap standing charges and unit rates rather than bill amounts, but that the resulting bill amount is used prominently in communications around the cap1. It estimated that, on the proposed new TDCVs, the annual bill would be around £35 lower for a medium usage customer on a dual fuel standard variable tariff paying by direct debit, caused by a change in the underlying assumptions rather than a change in the cost of energy1. Ofgem also noted that data previously supplied for 2016 and 2017, which underpins the current TDCVs, was revised in January 2023 after a minor error was identified1.
Why it matters for households
The TDCVs are the benchmark behind the "typical household" bill figures that appear in price cap and EPG announcements, so a change in them changes the quoted bill without changing what any household actually pays per unit1. For a home whose energy use is close to the medium values, the proposed figures would lower the assumed annual consumption used in those communications, and Ofgem estimates the communicated typical bill would be around £35 lower for a medium usage dual fuel customer paying by direct debit1. Households on Economy 7, Economy 10 and restricted meter billing are affected differently, because the peak and off-peak split is used to estimate a typical bill for those meters, and the proposed 60/40 split would shift more assumed consumption into the peak rate than the current 58/421. Around 3.7 million of Great Britain's 29 million domestic electricity customers have restricted or profile class 2 meters, and households that do not have access to gas or use electricity to heat their homes are more likely to have them1. The figures also underpin how the costs and benefits of new policies are assessed1. The typical domestic consumption values themselves are not a cap on what a home uses or pays.
What happens next
Ofgem will consider feedback and aims to announce a final decision on the proposed revised TDCVs in April 20231. The proposed values are a minded-to position and may change, and any further relevant information should be reported before 27 March 20231. The EPG was introduced on 1 October 2022 and will last until April 20241. Ofgem has also asked for views on whether the exceptional circumstances affecting consumption in 2020 justify using 2019 and 2021 data instead of 2020 and 2021 data, and on whether the price cap benchmark annual consumption values, which use the 2017 TDCVs, should be updated1.