Ofgem legislation DCP228 and DCP161 coming April 2018

Ofgem legislation DCP228 and DCP161 coming April 2018

New legislation DCP228 will bring fundamental change to DUoS (distribution of use system) costs from April 2018.

If you are a HH ( Half hourly) consumer, you will likely have seen DUoS charges on your bills before. DUoS charges make up to approximately 12% of all electricity bills. These costs are paid to the DNO ( distribution network operator) to support the ongoing maintenance and operating of the system (including over and underground cabling, substations and generators.) Unlike other elements of an energy contract, these costs are non-negotiable and agreed and regulated by the local DNO.

DUoS charges are split into 3 bands, a traffic light system of red, amber and green. Previously, those businesses consuming more in red times (peak) pay more and likewise, those consuming in the green off peak are charged less. DCP228 is set to change that. The new legislation will see a more level playing field split across the 3 bands.

DCP228 was initially raised by British Gas, with the aim of reducing the difference across the red, amber and green bandings. Hence, lowering the red and raising the green to flatten the spread. This is to reflect the actual costs to the distribution network more accurately.

 

Who will it affect?

All energy users will be affected. Although the increase will vary between DNO’s, the likelihood is it will mean increases for the majority of consumers. We may well see some suppliers absorb the rise until the end of existing contracts, however this is not guaranteed. If history is anything to go by it is also fairly unlikely all suppliers will do so. Having said that, businesses whom consume the majority of their usage at peak times may see a small decrease.

When will it happen?

DCP228 is set to come into force from the 1st April 2018.

can be done?

Essentially all suppliers pass this cost on to the consumer in one way or another. Pass-through contracts will illustrate the cost separately, however, it will still be built into the unit rates of fixed terms. Therefore the only real way to combat DCP228 is by smart energy management. Ensuring data is monitored and analysed, along with keeping costs down to a minimum with purchasing strategies in place.

DCP161

DCP161 will effect HH consumers whom breach their KVA/capacity allowance. This is set again by each distribution network with some breaches seeing as much as 3x their normal KVA costs for anything over an above the set allowance.

If you have not analysed your KVA in the last 12 months it is time to act. Prestige can complete a full KVA analysis advising if you are breaching regularly and if so what you are able to do about it. KVA can be increased but is dependant on what is available in your area from your local substation. Likewise, if your KVA is currently set too high this can be lowered, with caution, to save costs there also.

If you would like to discuss DCP228 or DCP161, contact Prestige today

03333 554 282

info@prestigebusinesssolutions.co.uk

 

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