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MOPping Up The Benefits Of Settlement Change

You’ve probably heard rumblings recently about a new ruling called P272. Not a particularly snappy title is it? Well, whilst it may not have been given a very meaningful name, it’s a ruling that will affect around 160,000 business meters and could have some significant cost implications, so it’s important to get to grips with your options.

So what is P272 and what might it mean for your business? Fundamentally, it’s about lowering the half hourly metering threshold. However, if you’ll indulge me for a moment, I’d like to take you through my train ticket analogy – as I think there are some important parallels.

If you regularly travel by train you will no doubt be well versed in selecting the best option to suit your needs. If you have to be in London before 9:00 then you expect to pay a premium price. If you can arrange to travel in the middle of the day or at a weekend then you might rightly expect a lower off peak price.
There might be other considerations involved in the decision-making process. For example, you might have a preference for a train operator or service that has fewer stops or perhaps provides particular services, such as Wi-Fi, or a laptop socket. All of these factors are weighed up against the prices offered and purchase the best package for your specific needs, based on your individual criteria. The days of one average rate have well and truly gone.

The same principles now apply to metering. P272 mandates that all monthly billed electricity meters – profile class 05 to 08 – must be settled on a half hourly (HH) basis from April 2016. This will improve bill accuracy as suppliers will invoice based on an automated meter reading every half an hour, as opposed to estimates between manual reads. It will also affect the way in which costs are worked out. Current energy costs are based on how much you use but not when you use it – P272 changes that.

It’s the equivalent of you being charged for your exact trip – time, distance, extra features and journey provider, which means depending on when you use your energy, some will pay more and some will pay less.

Suppliers will be busy installing half hour meters on profile class 05 – 08 sites ahead of 1st April 2016 deadline, and this half hourly data will be used to calculate to the penny how much it costs to supply you with the energy you use at the time you use it. The settlement cost suppliers pay will then be used to calculate your individual charges.

To make this new settlement process work, not only do you need the new meter but also a meter operator to keep it working and someone to collect and process the consumption data going through the meter. There is a cost associated with this – but it’s a highly competitive marketplace. Just as you can choose your train operator, in the new world of P272 you can choose who operates your meter (Meter Operator) and who collects the data (Data Retrieval and Data Collection). Shopping around is an option that’s open to everyone, and with current meter operator, data collection and settlement charges for existing half hourly supplies varying from as low as £275 up to a staggering £1000 per year it’s a worthwhile exercise. Now we don’t expect prices to be as high as this, but it’s a cost that you will have to pay so it makes sense to explore all of the options.

Of course we mustn’t forget that the real added bonus is that P272 provides you not only with accurate billing, but also with a huge amount of insight into how, when and where you use energy – every half an hour of every day. This data, if used properly, can really help you to drive efficiencies on site. If you can’t avoid using energy, at least think about when you are using energy. Don’t consume when you don’t need to and certainly not at peak times if you can avoid it.

So my advice is be savvy – just as you’d shop around for other services, take time to make sure you’re getting the right deal for your organisation when it comes to your metering services. You have choices, don’t just accept P272 related changes without proper consideration.

Three key facts on P272:

  1. All suppliers will settle profile classes 5-8 with AMR meters on a half-hourly basis from 1st April 2016.
    2. Customer bills will be more accurate but depending on the existing pattern of usage, some customers will see a fall in costs and others will see a rise.
    3. Customers affected will need to change their metering processes and appoint an accredited Data Collection (DC) agent and Meter Operator (MOP) before April 1st 2016

Dave Cockshott, Director at Inenco Group