A new measure introduced by the UK gas and electricity market regulator, Ofgem, could result in businesses being charged extra costs for their excess capacity use if action isn’t taken to avoid these penalties in the coming months.

DCP 161 will see a change to the Distribution Connection and Use of System Agreement (DCUSA) when it comes into force from April 2018, bringing in Excess Capacity penalties for businesses that have half hourly electricity supplies (i.e. supplies that have a “00” electricity profile class).

The change is being made in order to allow Distribution Network Operators (DNOs) to recover the costs they incur when customers exceed available capacity levels.

Consequently, businesses using Half Hourly (HH) meters that go over their agreed consumptions rates could be hit heavily in the pocket by charges amounting to more than three times the standard rate.

How does this differ from the current agreement?

Right now, businesses that exceed their capacity are charged the same amount for the excess energy they use at their contracted rate, offering little incentive for them to review and extend their agreed capacity with DNOs. Ofgem hopes DCP 161 will encourage consumers to do this instead of running over.

How will this impact my business?

Though rates will differ by region and voltage, costs are expected to be steeper in areas where there is a higher demand for capacity. If a supply regularly exceeds allotted available capacity, DCP 161 could increase the overall electricity costs by up to 1-2% or more depending on the consumption profile.

What should my business do to avoid these penalty costs?

Though businesses have until April 2018 to prepare for DCP 161, time is now running out. If your business already exceeds its assigned energy capacity or is at risk of going over its limit in the future, SMS Plc can help.

We can determine whether your business is liable to Excess Capacity charges, help you to lower your energy consumption in order to avoid excess costs, and also work on your behalf to get the best deal from your energy supplier – be it brokering an increase in your capacity, or negotiating a reduction if required.

Through our Capacity Amendment Projects, our Energy Bureau team will ensure your business secures a risk-free and accurately agreed capacity portfolio based on current and future projections of maximum demand.

What’s more, we help our clients to clearly understand their consumption profiles, providing them with both the visibility and ability to control the demand load on site.

For more information or expert advice on DCP 161 and Excess Capacity, call our Energy Bureau team on 02920 739 540 or email us and we'll call you back.