...if you don't already, the introduction of DCP 161 legislation will mean that you will need to have a good understanding of your business' energy usage against capacity.
What is DCP 161?
DCP 161 is a new measure which has been introduced by Ofgem and will be effective from 1st April 2018. This legislation follows the work that has been carried out as a result of P272 as it impacts those businesses that meet the requirements for having HH (Half Hourly) meters. For a refresher on P272 legislation, please see our blog.
It’s important to note that P272 should have been rolled out through your supplier by April 2017, therefore by April 2018, when DCP 161 comes into effect, you should expect to have been updated on information about the capacity of your meter. Our intelligence tells us that this deadline has not yet been met. Therefore, if you don't know your business' capacity or how much you will require in the future, your business could be at risk if this is not monitored.
In contrast to P272, the focus of DCP 161 is on capacity and from 1st April 2018, those half hourly (HH) supplies that exceed their assigned available capacity will be charged significantly more, in some cases as much as up to three times higher than the standard rate. The applicable rates will vary by region and it’s expected that if your business is in an area where demand for capacity is high your energy costs will reflect this.
What is the purpose of this legislation?
The purpose of the excess capacity penalties enforced by DCP 161 is to help the DNOs (Distribution Network Operator) to balance network usage by encouraging customers to manage their load more diligently or to request the right level of capacity upfront.
How does this differ from the current set up?
At present, high energy users are not incentivised to keep a close eye on their usage against their agreed capacity and users are charged at their contracted rate even if they exceed their agreed capacity. If you have a current HH meter and have historically received excess capacity charges you will not have been penalised and will have been charged at a standard rate. Going forward this cost will be at deemed (out of contract) rates to encourage you not to exceed capacity. This new legislation will encourage businesses to actively review their usage and increase capacity where required.
How can you protect your business from excess capacity charges?
Monitor your usage against capacity – It’s no secret that at BCR Associates we are a big fan of energy data and reporting, but with the introduction of DCP 161 it’s more important than ever to track your current and predicted energy usage. By measuring your electricity usage against capacity you will be able to forecast when your business might exceed your agreed Maximum Import Capacity (MIC) and will be able to apply for an increase.
Act quickly - As the start date for DCP 161 looms closer we will expect to see more and more businesses apply for additional capacity through their local DNO. As there is only a finite amount of capacity available, this will be allocated on a first come first served basis so the quicker you can apply for any additional capacity that you might need, the better!
Keep in mind your business’ growth strategy - If you are planning a merger, office or factory build or to invest in new sites, you will need to factor this in when applying for additional capacity. For new sites, you will need to check the current capacity available and if building new premises, it is possible to reserve capacity within in the designated network area.
What can BCR Associates do to help you to prepare for DCP 161?
Our consultants have extensive knowledge of the energy industry and benefit from direct links to the UK energy supply chain. We can help you to understand the electricity capacity available to you through your local DNO and if you have more than one site, we can help you to understand where the costs will differ across the various DNO's. We can help you to put strategies in place to ensure that you are not exceeding capacity across your business premises.
Our holistic approach to energy management means that we will work with your management team to develop a long-term picture of projected capacity requirements by carrying out forecasting for the next 5-10 years. Our data handling and reporting services will help you to plan how much electricity capacity your business will require, arming you with the knowledge you will need to apply to increase your energy capacity as and when required.
To talk to one of our energy experts about this new legislation or any other queries you may have, please call 03330 433 233.