DCP161 – Is your company at risk?

Following changes to the DCUSA (Distribution and Use of System Agreement), Ofgem has introduced a new measure – DCP161 which will be in force from 1st April 2018.  The DCP161 aims to improve the cost reflectively of the excess capacity charge calculation within the CDCM and EDCM.  This new measure ensures that half hourly (HH) supplies that exceed their assigned available capacity will pay significantly more.  This change will ensure that the additional cost that the DNOs (Distribution Network Operators) can incur, when customers exceed their available capacity levels, can be recovered.

What is DCP161?

DCP161 is a new measure introduced by Ofgem and will be in force from 1st April 2018.  DCP161 is a change to the existing DCUSA that enables the recovery of additional costs that are incurred by DNOs (Distribution Network Operators) when customers exceed their available capacity levels.

How will it affect my business?

You may need to renegotiate your rates with your energy supplier to ensure that your provider doesn’t charge you extra if you exceed your limit.

Electricity meters that have been or are due to be converted to HH as a result of P272 will be settled on the HH market in the time of the introduction of DCP161; it is therefore important to review your tariff before the 1st April 2018.

Why DCP161 has been introduced?

At present, there are no penalties if a company exceeds its available capacity other than the additional charge raised by the supplier, at the standard available capacity rate.  According to Ofgem, this approach has not provided sufficient incentive for consumers to review and increase their assigned available capacity where required.

As such, from 1 April 2018, under DCP161, users who breach their assigned available capacity will be charged an excess penalty rate, significantly greater than the standard rate.  Consequently, if a supply is regularly exceeding its available capacity, the impact of the penalty charges could materially push up overall electricity costs.

What are the penalties?

The additional charges will be heavily influenced by the rates applied by region and voltage, with costs expected to be higher in areas where there is a higher demand for capacity.  If a company is regularly exceeding its assigned available capacity, this charge could increase overall electricity costs by up to 1-2% or more.

How to avoid potential charges as a result of DCP161?

To avoid receiving additional charges, it is essential to understand the available capacity and maximum demand levels of the supplier.  Those who are moving from non-HH to HH meters are slightly more vulnerable as they may not know their available capacity and should seek advice to establish the agreed capacity.  It may also be sensible to negotiate your capacity charges, as excess charges will be based on the supplier you choose.

Businesses should be reviewed to assess whether they have historically been exceeding their agreed available capacity.  Companies who have been in breach should assess their consumption patterns to identify areas where usage could be reduced to avoid triggering the penalty charges, where energy efficiency works could be implemented to reduce overall consumption and cost, or where available capacity limits need to be increased.

How ETS can help?

ETS can assist your organisation in assessing and mitigating any risk you may be exposed to from this legislation.  Our consultants can also help you increase your operational efficiency and drive down your total energy costs.  For further information on our services and how we can be of assistance, please contact us at 0117 379 0850.

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