From April 2018, there will be major shift in how businesses throughout the UK are charged for their energy use. DCP 228, the name given to new regulations brought into play by Ofgem, will radically change how Distribution Use of System (DUoS) costs are calculated.
DUoS costs are made up of several different charges; one of which is time-based charges split into Red, Amber and Green (RAG) rates. As things stands, costs are at their highest for half hourly users during national grid peak hours (17:00-19:00), otherwise known as the red zone for energy use. To balance this, the prices are considerably lower during the green and amber time bands.
These charges are in place to act as a contribution towards the operation and maintenance of the UK’s Distribution Network. The RAG system was implemented to cover your distribution network’s charges for use of the grid during peak times.
So how will this change moving forward? To reflect more fairly the costs incurred by network operators during peak and non-peak times, the enforcement of DCP 228 will see the price charged during the red zone lowered, whilst an increase will come into force during the amber and green periods.
For further information on what goes into the make-up of your energy bills, read our handy blog.
How will DCP 228 impact me?
As most businesses operate in amber and green time zones, a rise in energy costs is anticipated across the board. In fact, one way or another, all businesses will be affected by DCP 228 apart from the UK’s very largest users, who’s charges are dictated by the EHV Distribution Charging Methodology (EDCM.)
OFGEM have stated that: “Although DCP 228 will increase charges for some consumers, red period charges will still be significantly higher than those for the amber and green periods.
Activities and investments made to manage consumption away from the red periods are still likely to be financially beneficial to those consumers.”
What impact will be had on your business depends solely on your current energy usage patterns. Whilst many are braced for an increase, those with a high use at peak times may experience a decrease in their costs.
What can I do?
To establish what effect the legislation will have on your business, it’s important to understand exactly when and how much energy you’re currently consuming.
Businesses with half-hourly meters should consider implementing the appropriate energy management software that will enable you to monitor, measure and report on your energy usage. Accurate data will become invaluable as you decipher what changes are needed to mitigate the risks facing your business post April 2018.
Remember, charges during the red time zones will still be significantly more expensive than the others, so it is vital that you continue to closely monitor your energy usage during this period.
Monitoring when your business is using the most energy is just the first step to safeguarding your future energy bills. Here at Great Annual Savings, we have the experience and expertise to make sure your business is ready when the new legislation comes into force.
If you’re still unsure on the impact DCP 228 will have on your business, or if you’re looking for peace of mind, contact our team today on 0800 130 3514.