This month we’re exploring Ofgem legislation P272 and DCP161, how they may affect your business, what you need do to ensure you’re meeting the rules, and where you can benefit from them.
P272- Let’s Review the Facts
P272 is a piece of Ofgem legislation and is considered one of the biggest changes in the business electricity market since the deregulation of the energy sector.
The change is seen as being a key step towards a smarter and more energy efficient economy. It achieves this through changing the way all electricity suppliers settle electricity consumption for businesses; in particular resulting in sites being migrated from non-half hourly meters (NHH) to half hourly meters (HH), enabling suppliers to produce more accurate bills.
“Suppliers can produce more accurate bills”
When did this come into effect?
|From 5th November 2015|
|If you have Profile Class 05-08 supply contracts up for renewal after this date must be migrated to HH (half hourly) Settlement within 45 days of renewal. (Profile Class can be found as the first two digits in the top line of the MPAN)|
|By 1st April 2017|
|All relevant metering systems must be migrated to the HH market by 1st April 2017 – although some supplies are only just falling out of contract still…|
Does my business need to appoint a Data Collector?
The legislation was put on electricity suppliers to ensure that the new meters are in place. There was no onus to make sure:
- That you are on the right tariff
- That you are being efficient with your energy supply
- That you are correctly predicting your energy usage
- That you are with the best energy supplier
So, when considering external Data Collectors, rather than the supplier’s own panel collector (conflict of interest?), make an informed choice and do plenty of research, choose one that can provide you with an all-round impartial service including reviewing your energy usage, tariff and supplier.
“Are you on the right tariff?”
If you appoint UK Energy Manager (UKEM) as your Data Collector the process can be managed for you. as well as receiving energy planning advice from an experienced adviser.
The alternative is that your supplier can appoint a Data Collector from their panel of providers; the main drawback being that many such appointed providers have little experience and may not be able to provide you with that all-round service to meet your requirements.
DCP161- What is It?
DCP161 was introduced by Ofgem on 1st April 2018 as the next step in its drive for energy efficiency.
It is a change to the existing Distribution Connection and Use of System Agreement (DCUSA) where those with Half Hourly (HH) electricity meters, greatly increased following the implementation of P272, who exceed their agreed capacity from the energy supplier will now have to pay excess capacity charges.
What does this mean for your business?
If you have a half hourly (HH) meter installed, your energy consumption data is automatically sent to your energy supplier and they can see exactly what your consumption is and when it is being consumed. So the supplier can clearly see whether you are meeting the agreed timing and level of energy consumption.
“Before if a business exceeded their capacity level, only Standard Capacity rates applied”
Before the introduction of DCP161, if a business exceeded their capacity level, only the excess usage charge would apply (charged at the standard capacity rate). With the implementation of DCP161 there is now the ability for the suppliers to recover the higher cost of supplying that unexpected excess at a punitive rate of up to three times the standard rate.
This pushes the responsibility on managing capacity to the end user. Where they only had to pay standard rates for any excess, there was no incentive for businesses to review their usage. That has now changed, with higher bills being received from April, and there is a clear need for businesses to manage their usage and to ensure they have arranged it at the right capacity level.
Businesses also need to bear in mind the need to avoid setting the capacity level too high, you might avoid paying the penalties, but you’ll still have to pay for the expected demand.
Quite simply this need to balance your capacity level to avoid hefty fines and paying for unused capacity leads to the need to work with an expert. Our expertise in this area means we can help our clients achieve the best outcome. We’ll review your set capacity levels with your provider to ensure you’re not hit with high penalty rates and that you have the right energy contract and supplier for your business.
“You need to regularly review your capacity to avoid paying hefty fines”
Most of businesses are too busy with day to day tasks to think about their energy usage, and only really notice it once it starts to hit cash flow and the bottom line. Energy is a key part of any business’s planning; if you don’t have an in house expert you need to work with an expert such as UK Energy Management (UKEM). We will look at the points we have already covered but also take a holistic approach such as looking to see whether you can change how and when the business is consuming energy, increase energy efficiency, etc. to save the business money.
UK Energy Management deliver:
- Expert impartial advice
- Established and trusted suppliers and installers
“We can provide the expertise you need”
We will be your hub throughout the process utilising the relationships we have with other experts who may need to be involved. Your business can be energy efficient and cost effective with our help.
If you are unsure where you stand regarding this legislation, then contact us for an initial consultation on 020 3893 8108 or firstname.lastname@example.org today.