A brief guide to DCP161 and excess capacity charges
April 2018 saw the introduction of new regulations that were approved by the UK government’s regulator for gas and electricity markets in the UK, Ofgem. The new Distribution Change Proposal 161 (DCP 161) allocates total electricity capacity and usage to certain sites, and places excess capacity charges on these sites if they use more than their allocated energy usage.
What are the limits?
Each site is given a maximum import capacity (MIC), which is the highest amount of energy the site can draw from the national grid at any one time. The limits vary between site, based upon the average historical energy usage, the nature and size of the site, and the extent to which the site is pushing investment in energy reduction or renewable energy technologies.
However, any site which uses more than their MIC is putting a strain on the overall grid, and as such electricity generators are looking to use these limits and additional charges as incentives for businesses and companies to reduce their energy consumption. Currently, these additional charges are calculated at the same rate as the agreed capacity usage, meaning that sites are not experiencing any punitive charges for exceeding their MIC. While this means that at the present moment there is no financial incentive for sites to stay below their MIC, it is very likely that this will change in the near future, with additional punitive charges being introduced in the near future.
What does this mean for businesses?
In order to ensure that none of your sites will exceed their MIC and face future additional charges, it is worth acting now. The first step is to compare your average energy usage with your allocated MIC. If your figures are well below your allocated amount, then you should be fine. However, for any businesses that are close to, or exceed their MIC then you need to focus on your energy management strategies and seek to reduce consumption. The best way to do this is through a professional and dedicated energy management firm.
At Touchstone Services, we pride ourselves on providing businesses with energy management services, offering bespoke and tailored solutions to all of their energy usage needs. For more information about our services, or to find out how we can help you, please contact us.