How ‘Excess Capacity Charges’ are changing in April 2018 (what is DCP 161?)
From the 1st April 2018 there is a planned change by Ofgem to change how excess capacity for Half-hourly (HH) Electricity supplies will be charged. Business customers exceeding their assigned available capacity for their HH Electricity supply will be heavily penalised. It’s known as DCP 161. Read on for more info and what a business can do now to help mitigate the impact…
What’s the current situation?
Currently, if a HH electricity supply exceeds its available capacity, the supplier adds charges for the excess kVA at the standard available capacity rate – ie no penalty is charged.
If an HH supply is not incurring charges for breaching capacity now, then assuming the usage profile doesn’t change there shouldn’t be anything to worry about. However, not all HH supply profiles will remain a consistent profile month to month and also, it’s not always obvious on supplier billing whether you are breaching your available capacity, especially as currently the charges are minimal as they are charged at the same rate.
What is changing, and what does it mean to businesses?
From 1st April 2018, DCP 161 will be come into effect. It is a change that will introduce excess capacity penalties for half hourly electricity supplies. The introduction of DCP 161 will ensure that the additional costs that Distribution Network Operators (DNOs) can incur when customers exceed their available capacity levels are recovered.
Excess capacity penalty rates could be up to three times higher than the standard rate. Penalty rates will vary by region and voltage, with costs expected to be higher in areas where there is a higher demand for capacity. Depending on the consumption profile, if the supply regularly exceeds its assigned available capacity, this change could increase overall electricity costs by up to 1-2% or more.
What can a business do now?
Firstly, businesses should check current invoices to make sure that they are not already incurring excess charges. These will normally be charged at the same rate as the normal availability charge so may not be obvious, and even if observed, may not until now have caused any concern. If there are excess charges businesses should look to either agree a revised capacity or take energy saving measures to reduce their consumption and/or maximum demand. A supply’s Maximum Demand is usually stated on the supplier bill.
Analysis of a supply’s HH data (suppliers can usually provide upon request) can provide useful information about the supply profile, identifying peak periods and points of low usage. Analysis of the supply profile can help a business to reduce their energy consumption and avoid excess charges, without necessarily requiring an available capacity increase.
This is more confusing for electricity meters affected by P272. Electricity meters that have been or are due to be converted to HH as a result of P272, will be settled on the HH market in time for the introduction of DCP 161. A business wont necessarily know what the available capacity for this supply is being set at. This might not even be evident until after the meter has been upgraded to HH and the first bill is available. In this case a business may not be able to do a huge amount now, other than discuss with the current supplier to assess their thoughts regarding available capacity levels prior to change to a HH P272 supply.
All in all, supplier billing and HH data can actually be extremely confusing for businesses to analyse themselves. If you’d like some help with available capacity and / or maximum demand, or simply wish to have a no obligation chat on the topic, please do give us a call.
Contact Luisa Keig on 01454 614511 or email firstname.lastname@example.org