Changes to excess capacity charges for Half-Hourly Electricity Customers from April 2018
DCP161 – Penalties for exceeding agreed capacity
Ofgem have agreed changes to the Distribution Code that mean that Half-Hourly customers who regularly exceed their agreed maximum capacity will be penalised through new excess capacity charges. This change will enable the additional costs to be recovered by the Distribution Network Operators (DNOs) that can incur when customers exceed their agreed capacity levels.
At the moment there is no penalty for exceeding level of maximum capacity agreed between the customer and DNO. The customer will pay additional kVA charges but this does not act as an incentive for consumers to regularly review and revise their maximum capacity consumption.
From April 2018, businesses that regularly exceed their maximum capacity may face charges penalty charges of up to three times the rate that they pay for their agreed capacity which could mean significant additional expenditure.
Half-Hourly consumers who wish to avoid these new penalty charges should review whether they regularly exceed their agreed capacity and if so implement energy efficiency improvements to reduce their maximum demand or contact their Distribution Network Operator to agree a revised maximum capacity level.
What is DCP161?
DCP161 is a new measure introduced by Ofgem (the Office of Gas and Electricity Markets) and will be in force from 1st April 2018.
It is a change to the existing Distribution Connection and Use of System Agreement (DCUSA) that introduces excess capacity charges for those using Half-Hourly (HH) electricity supplies who exceed their agreed consumption level.
How will my business be affected by DCP161?
HH meters automatically transmit the data back to your electricity supplier. From 1st April 2018, if you exceed your limit, your electricity supplier can pass on the excess capacity charges that are applied by the Distribution Network Operator (DNO) to you, the customer. These charges can be up to three times the rate that you pay for your agreed capacity, which could mean significant additional expenditure.
Why is this measure being introduced?
At the moment, if a business exceeds its agreed capacity level, no penalty is charged – other than the charge for excess usage at the standard capacity rate. As a result, there has been no incentive for business energy users to review their usage and adjust their capacity where it is needed.
The introduction of DCP161 aims to provide that incentive to make sure that HH electricity users make the proper arrangements to manage usage or arrange the correct capacity levels.
How can my business avoid these excess capacity charges?
HH consumers who wish to avoid these new penalty charges should review whether they regularly exceed their agreed capacity and, if so, implement energy efficiency improvements to reduce their maximum demand or contact their DNO to agree a revised maximum capacity level.
Please note that you must contact your DNO and not your electricity supplier in order to discuss and apply for a review regarding your agreed capacity. Contact details for your DNO are included on the back of your invoice.