Electricity Billing Changes that Demand Your Attention!
Three quick questions for any company wanting to keep their electric costs to a minimum:
- Do you have a Half Hourly meter? (nb. Recent changes aka P272 may mean you unknowingly do.)
- Do you know what your Available Capacity is?
- Do you know what your Maximum Demand is?
If not, further investigation is required! If you do, how does your demand compare to the capacity?
If you are supplied via a half hourly electric meter, a new measure known as DCP 161, means that if you exceed the Available Capacity assigned to your electric supply, you will pay significantly more from April 2018
Who is affected?
If your business has a half hourly meter these changes apply to you.
Historically, if you’ve had a regular power demand above 100 kW, it’s likely (although not guaranteed) that you’ve been supplied via half hourly metering. However, added to this, an ongoing programme, known as P272, means that an additional c. 175,000 UK business supplies are currently switching to half hourly metering, regardless of their consumption level. So, you may now have a HH meter without knowing – if you’re unsure check your bill, ask your supplier or, even better, ask us.
What is a Half Hourly (HH) meter?
In short, a half hourly (HH) electric meter is one where automated meter reads are taken every half hour and forwarded to the supplier (via a Data Collector/Aggregator), and then used to bill the supply.
What is the issue?
At present there’s no punitive charge if your maximum demand (ie the highest amount of power you use at once) exceeds your available capacity (the highest amount you have been assigned to use), instead the excess demand is charged at the same rate as that within the capacity. However, OFGEM’s changes mean that, after 1st April 2018, you will be penalised for exceeding the capacity threshold. This is being introduced so that the additional costs incurred by generators (and passed through the supply chain) for excessive demand are recovered from the end users that consume it. It’s hoped that it will result in behavioural change, so these end users are incentivised to either increase their capacity or adjust their consumption to avoid the charges. Ultimately it should mean that those who require more power will either have to pay for it or reduce their demand.
What will the charges be?
Rates are yet to be published, but it’s expected that demand above capacity could be charged at over three times as much as that within capacity. How much this equates to in monetary terms depends on the level of your demand but could be an increase of around 1-2% on your overall power costs. Areas where there’s little margin between required demand and available capacity are likely to see the highest charges.
How can you avoid the charges?
You can avoid these excess charges by arranging a higher import capacity with your DNO, or by reducing your peak demand through either energy saving measures or by time management of your consumption so that you get a more even spread of demand, rather than periodic spikes.
If you have a half hourly meter – and particularly if you have recently switched to HH under P272 – it’s important that you know what your available capacity is and how this compares to your maximum demand. You can then see whether you will be impacted by the new charges and, if so, take appropriate action in advance