April the 1st has come and gone with the full effects of the Ofgem legislation P272 coming in to force. The question is who has been left looking foolish, the energy industry or the unsuspecting customers they supply.
What is P272?
P272 is a mandatory change for non-domestic energy users initiated by Ofgem, the government regulator for gas and electricity markets in the UK. In its essence, P272 is designed to give a specific bracket of business customers that use more energy than the average customer more control of their supply by collating their usage data on a half-hourly basis.
Who does P272 affect?
The changes apply to any larger non-domestic site with a profile class of 05, 06, 07 or 08. Their AMR (Automated Meter Reading) meters are due to be re-programmed to take Half Hourly readings.
Domestic properties (profile classes 01 and 02) and smaller non-domestic customers (profile classes 03 and 04), as well as businesses that are already metered Half Hourly (profile class 00), are not affected.
What do I need to do?
P272 came into effect on 5 November 2015, and suppliers were supposed to have implemented all changes arising from it by 1 April 2017. This means that all businesses that are affected by P272 should have been informed about additional charges and their meters changed to Half Hourly settlement when your contract was renewed.
If your business electricity contract hasn’t been due for renewal since 5 November 2015 yet, your existing AMR meter will still have to be re-programmed within 45 days of the approaching renewal date. If you haven’t used an AMR meter so far, your supplier will change your meter at no cost to you.
What are the advantages?
Behind Ofgem’s latest move is the notion that Half Hourly metering can provide a more transparent and accurate picture of a business’s energy consumption.
- Fairer Billing
Half Hourly data will create a fairer base for billing. Instead of using a set industry shape, suppliers can now use your actual consumption data to create your bills. Full visibility of a customer’s usage data also means that they do not have to build a risk premium into prices or offer a price that is open to increase on both wholesale and third party costs to mitigate the risk.
- Control over consumption
With Half Hourly data, you will be able to accurately map and adjust your energy usage in order to save money in the future.
What are the disadvantages?
- Distribution and transmission charges
Many businesses should have seen an initial increase in their energy costs that can be attributed to the new distribution and transmission charges. Those charges relate to the specific agent services Half Hourly customers are required to have in place so your supplier can retrieve Half Hourly data from your meter.
If you haven’t chosen a Meter Operator (MOP), Data Collector (DC) and Data Aggregator (DA), your supplier will have appointed them on your behalf and will pass through any charges to you. Be aware that you have options for these agents, and there are potential savings to be exploited.
- KVA charges
Another consequence of P272 is that you will now be liable to pay KVA charges for the first time. For newly Half Hourly metered sites, establishing a chargeable KVA level is problematic. Up until the change to Half Hourly metering, the distribution networks have not been recording the site’s maximum demand, which is the usual basis for calculating the KVA level. Since suppliers have to charge something, they are forced to go with their best guess.
This can be a figure anywhere between 50 and 100 KVA, depending on the supplier.
For more on KVA charges and how to make sure you aren’t paying for a KVA allowance you don’t need, please have a look at our blog article on the topic.
It is unclear at present how far suppliers will credit back any charges already applied, which makes it even more important that you act now. As more and more data becomes available, the process will only improve but you should not sit and wait. There is no need to wait for your renewal period. If you feel you could fall in to this bracket, please do get in touch so we can help.