LRIC

Long Run Incremental Cost (LRIC) is one of two methodologies used to calculate site-specific EDCM tariffs for Extra High Voltage connections. It's defined in DCUSA Schedule 18 and focuses on the incremental cost impact of demand at each specific network location.

How LRIC works: LRIC calculates charges based on:

• The incremental cost of an additional kW at each network node
• Long-run network development costs
• Location-specific utilisation and capacity headroom
• The site's marginal impact on network investment timing

Key concept - nodal pricing: LRIC uses detailed network modelling to determine how adding demand at each specific location affects network costs. A site in an area with spare capacity will have lower LRIC charges than one in a constrained area requiring reinforcement.

LRIC vs FCP:

Location signals: LRIC provides strong locational signals - sites in network-constrained areas face higher charges, potentially encouraging them to reduce demand or locate elsewhere. This is more granular than CDCM's regional approach.