How can your business benefit from monitoring its’ supply capacity, and avoid excessive energy bills?

Monitoring your business’ authorised service capacity, sometimes known as supply capacity or availability charge, could provide huge cost savings on your commercial energy bills.

What is supply capacity?

Every half hourly metered site within the UK has a supply capacity, which is set by the Distribution Network Operator (DNO) based on the agreed capacity reserved for each location. Your business’ agreed supply capacity is the amount of electricity your DNO must make available for each of your half hourly metered sites. Your business agrees the level of capacity that should be reserved for each of your half hourly meters with your DNO. You are able to change the agreed level; however, this can only be done once per year.

Supply capacity is different to your consumption, instead it relates to your maximum electricity demand per half hourly meter as agreed and reserved with your DNO. Available capacity is measured in Kilovolt Amps or kVa whilst your consumption is measured in Kilowatt Hours or kWh. Capacity charges vary across the UK according to location, ranging from approximately 70p to £1.50 per kVa.

Your business is invoiced monthly for capacity charges as part of your routine electricity bills, normally itemised as kVa. You will be charged for the entire agreed reservation of electricity whether your site uses this capacity or not.

Why it is important to make sure your business has the right level of capacity?

Capacity charges can be costly, and if set too high your business will end up paying for considerably more than is actually required for each site. If you use more than the agreed reservation, then you will see an excess capacity charge itemised on your monthly electricity invoices.

Since April 2018 the DCP161 regulation introduced strict penalty charges for businesses on half hourly meters that exceed their agreed capacity supply. These are typically up to 80% higher than the charges you will pay for your agreed capacity. In addition to these excess charges, if you regularly exceed your agreed capacity limit then you could face harsh penalties, and you may even end up liable for network damages. It is therefore imperative that your business reviews and sets capacity charges at the right level to avoid un-wanted excess costs and penalties.

What should your business do?

It is important that your business reviews its’ capacity supply to avoid un-necessary excess charges and any potential penalties. There are several measures you can take to help you avoid penalties under DCP161:

1. Check your agreed supply capacity reservation and review your current levels by analysing your monthly energy bills. Your invoices should help you to build a clearer picture of how each site is using its’ agreed levels, and you can determine whether they are coming under agreed levels or exceeding them. If you are using more than your agreed amount, then this will be visible as an excess capacity charge on your invoice.
2. Suppliers often get agreed supply capacity amounts wrong, so it is important to check your agreed supply capacity by reviewing your DNO connection agreement, and cross checking this with your electricity invoices.
3. If you find that you are exceeding your agreed supply capacity, then you should look at increasing your capacity reservation to avoid un-necessary excess charges.
4. On the flip-side, if you are falling short of your agreed capacity supply then, you should look at reducing the amount agreed to coincide with your actual usage and avoid having to pay for what you are not using. If you continually use less than your agreed capacity, you will still have to pay for the full reservation outlined in your DNO agreement.

Remember, you can only change your agreed supply capacity once per year, so you should only adjust this if you have significant evidence from your analysis to do so. Setting your supply capacity too high means you will be paying for more than you need but, setting it to low will result in excess capacity charges at a far greater rate per kVa than your agreed capacity level.

How can The Logical Utilities Company help?

The logical Utilities Company can review your business’ supply capacity charges on your behalf ensuring you’ll only pay for what you use.

Our team of experts will review your current supply levels with your DNO and analyse these against your actual kVa usage. They’ll ensure your agreed capacity supply reservations with your DNO are set to optimum levels, so you won’t be paying any un-necessary excess charges or be faced with any surprise penalties.

Talk with one of our expert advisors to discuss how we could help your business avoid excessive energy bills by calling 0845 113 0125, or email info@logicalutilities.co.uk