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P272 Has Been Amended: How Do The Changes Affect Your Business?

On 25th April 2016, the DCP248 amendment received approval and became part of the P272 legislation. Put simply, the changes are all about making sure businesses don’t pay too much in capacity charges once they move over to half hourly billing and settlement under P272. This could occur if businesses find themselves tied into inaccurate or inappropriate Maximum Import Capacity (MIC) agreements. Here is our easy-to-follow overview of the DCP248 modification, what action you need to take, and how it may affect your business.

What does the new amendment mean to businesses?

For businesses in profile classes 05-08, capacity charges will always have formed an integral part of overall power costs. However, the move to half hourly billing will create a need for much greater awareness of how these charges work.

Thanks to the amended P272 terms, businesses who are set to move to half hourly settlement of their accounts now have a 12 month grace period after transition in which to agree an appropriate Maximum Import Capacity (MIC) with their Distribution Network Operator (DNO). As MIC data does not currently exist for many of the affected business customers, this additional flexibility will protect customers in three ways:

  1. It will ensure that customers are not charged standard capacity charges for an MIC which is actually in excess of their required capacity.
  2. It will ensure that they do not incur costs from ‘excess capacity charges’ if the MIC set by their supplier is too low for their needs.
  3. It will protect customers from loss of capacity rights at a site, which could occur if a default MIC is applied that is lower than one agreed previously which they wish to retain.   

What action should businesses take now?

There are two important messages for those businesses who are being migrated to HH billing, and who may have already received correspondence from their supplier regarding capacity charges:

    1. Don’t agree to an MIC charge with your DNO when you switch to HH settlement

Ordinarily, MICs are agreed with the DNO as part of a connection agreement. However, DCP248 can only protect those businesses who have NOT already agreed an MIC value with their DNO. Under the new terms, those businesses who do not agree a value upon migration will have one temporarily applied by their DNO in accordance with the operator’s individual approach; which may involve the application of Maximum Demand (MD) data, or historic MIC data for the site. If appropriate, this temporary value can then be reduced within the 12 months following change of measurement class, and reductions applied retrospectively.

    2. Be ready to interrogate your capacity charges once 12 months has passed

The move to half hourly settlement will provide real insight into energy usage and efficiency; also allowing for the gathering of accurate capacity data. This new wealth of data isn’t just for the suppliers – savvy businesses will be ready to interrogate the new MIC values which their supplier suggests after the new 12 month grace period, to be sure that they don’t incur any unnecessary costs on their energy bill. Businesses who are unsure how to go about analysing their capacity data, or who need impartial advice on what an appropriate MIC value would be for their sites, may benefit from seeking further advice before signing up to a new connection agreement.

If you are unsure how to respond to correspondence from your supplier in the light of this new amendment to P272 legislation, help is available.