From 1st April 2018 a regulatory change called DCP161 will come into affect. This means that Excess Capacity charges (previously cost neutral with capacity charges) will be significantly higher. The scale of this increase varies by supply type and area of the country. DCP161 will only impact Half Hourly electricity supplies that attract capacity charges and whose demand exceeds the contracted level of capacity held with the Distribution Network Operator (DNO).
What is Available & Excess Capacity?
Available Capacity (sometimes called agreed supply Capacity) is an agreed maximum amount of electricity that the local Distribution Network Operator (DNO) is required to make available to the supply at any time. It is measured in kVA and is only charged on half hourly metered supplies. This set level is a contract between the customer/end user and the DNO. The charge itself is published and levied by the DNO through the Electricity Supplier to pay for the infrastructure and ensure delivery of the contracted capacity.
If a supply demands more than the agreed Available Capacity at any time, the DNO will apply an Excess Capacity charge for that extra demand on the network. This Excess Capacity charge appears on the Electricity Supplier’s invoices if any excess demand has occurred.
What is DCP161 and how is it changing the Excess Capacity charge?
DCP161 is the regulatory code given to the change where DNO’s are able to levy higher charges for Excess Capacity. Up to now, Excess Capacity has been charged at the same prevailing rate of Available Capacity, offering no financial incentive for customers to increase the contracted Available Capacity. From 1st April 2018 Excess Capacity rates will typically be approximately 1 ½ - 2 ½ times higher than Available Capacity.
As a further note, when looking to review contracted Available Capacity please also consider that if a supply does demand higher than its contracted Available Capacity, not only does it attract Excess Capacity charges, but there are potential liabilities that the DNO could levy in relation to the physical impact of that Excess Capacity on the network infrastructure. In the current climate where local networks are being required to carry increased load requirements, this may become more prominent. Please refer to your DNO and/or your capacity agreement for further information.
How do I know if I am at risk of being charged Excess Capacity?
Excess Capacity shows as a separate line on your invoices. Reviewing the recent history of invoices (at least a year) will help quantify likelihood of your supply/supplies attracting Excess Capacity charges and liability in the future. Using the published rates, you can then estimate the charges from 1st April 2018 to begin to understand the cost impact of the increase in charges. If you are a LASER Fully Managed customer and would like some assistance on this, please contact your CRM team to enquire about obtaining a report formulated from the billing information we hold. However please note this is not a guarantee of future demand from the site.
What do I do next if I want to reduce my Excess Capacity?
There are two options in reducing your Excess Capacity:
Increase your contracted Available Capacity with the Distribution Network Operator. Once you have contacted the DNO, the forms are filled in and if they agree to the increase, a new Capacity Agreement will be sent to you which (once checked, signed and returned) will start reflecting on the supply invoices. Please note however that you cannot keep changing your contracted Capacity, once reviewed the DNO will typically have a restriction on how soon you can revise it. As well as this, depending on local grid constraints they may ask for a fee for re-enforcement works to take place to provide that capacity.
Look to reduce your demand and reliability on the grid. A number of energy management and efficiency measures can be put in place to help manage your load, thus reducing your exposure to these risks and increased charges, as well as lowering ever burdensome consumption costs and carbon footprint.
It is worth noting that whilst increasing the contracted Capacity would remove a more expensive Excess Capacity charge, the size and consistency of your supply/supplies exceeding their contracted Capacity will determine whether there is a financial benefit; paying for extra Capacity every month may cost more than a supply exceeding its Capacity sporadically, even at this higher charge due to DCP161. Conversely it may be financially beneficial if the demand regularly and consistently exceeds Capacity as from 1st April 2018 a contracted level will be cheaper.
If you would like to investigate how you can manage your costs by reducing/shifting demand from the grid through efficiency or demand side response measures, please feel free to contact us for further information.