In April 2018, we’re going to see further changes to energy legislation that are likely to have an impact on the majority of businesses’ energy bills. While there are only a few weeks to go until many of these changes come into effect, businesses that act now could mitigate potential energy cost rises.
Here are the imminent changes you’ll need to be aware of…
On April 1 2018, Ofgem will introduce a new measure known as DCP 161, which will affect all businesses on half-hourly (HH) meters. Currently, businesses that use more than their available capacity are only charged for the excess kVA they use at the standard available rate. Once DCP 161 comes into force, businesses that exceed their capacity will face a penalty of up to three times the standard rate.
Clearly, this could have a serious impact on your business’ energy costs. If you’re on a half-hourly meter, you will need to monitor your usage carefully to ensure that you don’t use more than your assigned capacity, and regularly review your consumption – adjusting your capacity when necessary.
Also going live in April is DCP 228, another new measure from Ofgem, which will change the way that Distribution Use of System (DUoS) costs are calculated. At present, businesses are charged significantly more for usage during Red band (or peak) periods than they are for the energy they consume during Amber or Green band periods. DCP 228 will level out the band charges, so Red band charges will be reduced and Amber and Green band rates will increase.
If your business typically uses a lot of energy during Red band periods, you may see a slight reduction in your energy bills. However, the majority of businesses that operate during Green and Amber periods are of course likely to see their costs rise once DCP 228 comes into force.
Energy intensive industries (EII) will receive a discount on the Renewables Obligation (RO) Levy from April 1 2018, in addition to the exemption to the Contracts for Difference (CfD) Levy, which is already in place. We can also expect to see an exemption on the Feed-in Tariff (FiT) Levy come into force later in the year, subject to EU State Aid approval.
For businesses that aren’t eligible for exemption, the introduction of these discounts for EIIs is likely to lead to an increase in energy costs, as they will be forced to absorb the extra costs.
April 1 2018 will also see the introduction of the Minimum Energy Efficiency Standards (MEES), which will require landlords to ensure that their properties have an Energy Performance Certificate (EPC) rating of an E or higher if they want to rent them out to new tenants or renew an existing tenancy contract. Landlords that don’t comply with these regulations could face penalties of up to £150,000 – so it pays to be compliant.
Landlords, property managers and agents of commercial properties will need to check whether MEES applies to them. If it does, they will need to ensure they have a valid EPC in place, and at least an E rating in order to continue to let the property.
New connection charges
If your business has plans to apply for a new connection, you should be aware that from April 6 2018, there will be changes to the way that you will be charged for your application.
Under existing rules, connection applications are free for all customers – it’s only those that accept the connection offer that are required to cover the assessment and design (A&D) costs that DNOs incur when they prepare connection offers. Once the rule changes come into place, DNOs will be able to ask for the A&D fee upfront, and you will need to pay this fee regardless of whether or not you accept the connection offer.
Will your business be compliant?
At Inenco, we know that when you’re focused on your core business activities, it can be difficult to ensure you’re compliant with energy legislation. That’s where our expert compliance team come in – they can handle all of the intricacies of compliance reporting for you, leaving you free to concentrate on your business.
If you’d like our support in navigating the upcoming changes to legislation, give us a call on 08451 46 36 26 or email firstname.lastname@example.org.