Business energy users are being invited to contribute to a consultation on proposals by Ofgem to change the way transmission charges are calculated, a move that could affect the cost of future energy bills.

Transmission charges make up approximately 4% of energy bills and are one of a number of elements of an electricity bill that affect the overall price paid by the consumer.

The watchdog is seeking views on plans to modernise the current system to take into account market changes, including the increased use of renewable energy sources.

The changes could see charges drop for Scottish electricity generators by around 60% whereas generators in the South East that receive payments under the current system may face charges under new plans.

The current charging system is based on the distance between a power supply and the areas of highest demand for electricity. It was introduced in 2005 to promote efficient use of the networks and encourage competition.

Ofgem believes a new system of calculation is needed as more new and low carbon generation sources are introduced to the electricity networks to meet climate change targets.

Ofgem’s preferred option is to retain location-based charging where generators based furthest away from areas of high electricity demand pay more. However, improvements would be made to the formula to take account of the type of generator and how often they are using the network to transmit power. This is because the amount of power produced by some generators, mainly wind farms, is variable.

The regulator wants to rule out a formula which would see all generators pay the same charge regardless of where they are located, claiming this would result in consumers bearing around £7 billion of increased costs.

Industry views are being sought ahead of a final decision in April, after which National Grid will move to amend industry rules with a new regime possible by 2013.