April: the month that many of us open our energy bills each year and begin to breathe that little bit easier.
With spring in the air, we can finally wave goodbye to the long, dark and cold period of winter – and with it the most costly time of the calendar to power our homes and business premises.
This year, however, the dawn of spring may inversely see our energy bills grow alongside the fast sprouting flora. That is because as of 1 April 2018 there are two major regulatory changes coming into force that could significantly increase your Price Risk if action is not immediately taken.
Though April is only around the corner, it’s not too late to reduce your business’ risk to the rising costs brought on by this new legislation.
Why are business energy bills set to go up?
Energy bills will be affected by two significant changes to existing distribution charges, DCP 161 and DCP 228.
DCP 161 will see a change to the Distribution Connection and Use of System Agreement (DCUSA), bringing in Excess Capacity penalties for businesses that have half hourly electricity supplies (i.e. supplies that have a “00” electricity profile class). Consequently, businesses using Half Hourly (HH) meters that go over their agreed consumption rates could be hit heavily in the pocket by charges amounting to more than three times the standard rate. Find out more.
At present, Distribution Use of System (DUoS) costs are at their highest for half-hourly consumers during late afternoon – or the so-called ‘Red Band’ – meaning a large percentage of distribution company revenue comes from premium pricing in this period. The consensus is that costs need to be spread more equally throughout the day, leading Ofgem to strike more of a balance between the DUoS bandings (Red, Amber, and Green). In simple terms, DCP 228 will enforce a reduction of charges in red zones while amber and green will make up the difference and see marked increases. This means that most business customers will see a rise in costs. Find out more.
What can I do to reduce my Price Risk?
If you haven’t moved already to mitigate the potential impact of DCP 161 and DCP 228, you are running out of time. However, there are still a number of things you can to do to protect your business from price increases.
Remember, non-commodity costs – the growing policy and network charges brought on by Britain’s gradual decarbonisation – are here to stay. So much so that the non-commodity element of energy bills will make up two thirds of the average invoice by 2020, and are forecast to increase electricity costs by 55% over the next decade. As a result, if you don’t act now, your Price Risk is only set to swell.
With the onset of DCP 161 and DCP 228, make this Spring the catalyst for permanent change when it comes to your energy spend. Discover how we can make your business #energyconfident in the face of rising non-commodity costs here.
Talk to one of our experts!
If you’d like a no-obligation conversation about how we can help you reduce your price risk, including mitigating the impact of DCP 161 and DCP 228, call us today! Chat to one of our team directly at 02920 739 540 or email us and we’ll get back to you!