Capacity Charges
Half Hourly Electricity Meters
Everything you need to know about Capacity Charges for Half Hourly Electricity Meters
What are Capacity Charges?
The first thing to do is to understand what is meant by capacity, and the easiest way to explain this is to give an example. A small client of ours manufactures a range of medical equipment. They have 4 staff operating from a small industrial unit. Apart from the usual lighting, IT, and small motors running minor processes such as conveyor belts, there was nothing unusual about their electricity demand, except for one piece of equipment. They have a plastic extruding machine which needs to reach high temperatures to operate effectively and it is heated electrically. They run this equipment twice weekly, for around 4 to 6 hours at a time.
During the hours when this equipment isn’t in use, site demand is in the region of 50 kVa, however, the moment the extruder started, the demand shoots up to 200 kVa.
This critical process demands consistent power, and in order to ensure that there is always adequate power available they negotiated with their Distribution Network Operator (DNO) to secure an Authorised Capacity of 225 kVa. Had they not done so they would have incurred very large monthly Excess Capacity penalty charges.
Your site Capacity is the power (in kVa) reserved from the network that guarantees a specified level of power to be available to your Half Hourly supply. It generally reflects your Maximum Demand (MD).
Before a site is connected to the Distribution Network, the capacity needs to be agreed upon between the site occupier (or landlord) and the DNO so demand can be properly managed throughout the local area. Once established, you will be charged at the published rate in either £s per month per kVa, or pence per day per kVA.
Note: Capacity should not be confused with consumption. It relates instead to your Maximum Demand. It is measured in Kilovolt Amps (1,000 volt amps). If you had ten electric motors rated at 10 Kw this would equate to 100kVa and you would apply for 110 kVa site availability. The 10% excess is to mitigate any unforeseen circumstances.
Authorised Service Capacity
If your organisation has a Half Hourly electricity supply with a Current Transformer (CT) meter you should have a Capacity charge shown on your electricity bills. These charges are set by your Distribution Network Operator (DNO) and are based on the agreed Capacity for your site. The charges are added to your energy bill and collected by your energy supplier on behalf of your DNO. They are known as Pass Through charges because they are collected by your supplier and passed-through to a 3rd party. The charges should be itemised on bills as Available Supply charge, or Supply Capacity and the costs vary throughout the UK. They range from as low as 80 pence per kVa to £1.80 per kVa.
Examples of Capacity Charges
As Shown on Energy Bills
Capacity charges can be costly. Businesses with 600 kVa and a charge of £1.50 per kVa will be paying £900 per month regardless of how much electricity is consumed, or the maximum demand.
Half Hourly meters with Whole Current (WC) do not meet the criteria for capacity charges.
How do I establish the correct Capacity level?
You will need to take an inventory of all the electrical equipment to be installed on your site and calculate the rating of each component. Adding these together will provide you your notional Maximum Demand. After your site has been in operation for a few months you will be able to determine your actual peak demand. Your Authorised Service Capacity should be set just above this level. Before this, you should work on a calculated Maximum Demand.
If you would like help in establishing your Maximum Demand, contact us.
Cutting your capacity costs
Your DNO will allow you to apply for a reduction in capacity once a year under one of two circumstances.
Firstly, if you are using significantly less than your agreed Supply Capacity your DNO will lower it to a level more reflective of your actual demand levels. *
Secondly, if you are exceeding your agreed Capacity, then you can apply for an increase to a more appropriate level. which will avoid Excess Capacity charges.
Note: Before agreeing on a drop-in capacity for your business you should be entirely sure that you will not require a subsequent increase. It is much easier to give up than to obtain capacity.
We can carry out a capacity analysis on your behalf and engage with your DNO to lower or reduce it. Contact us for help.
Capacity Charges
Be aware!
Your Authorised Capacity may have been agreed a long time ago and no longer reflects the needs of your business. You could find yourself with the level set too high, or too low. In either circumstance, you will be charged more than necessary.
If your agreed capacity is set too high, then you will end up paying for something you don’t need, and you will be wasting money.
What can you do to avoid paying Excess Capacity charges?
Following the introduction of DCP161 in 2018 you’ll be charged as soon as you exceed supply. This will only become apparent once you receive your next electricity bill. If you’re not sure whether you’re currently on a half-hourly meter, we can check this for you.
If you’re in the process of moving to a half-hourly meter your capacity will be set automatically, based on the demand established by the previous occupant, probably at the wrong level.
You should review your contracted capacity across your business from time to time to make sure that your Maximum Demand matches your Authorised Service Capacity.
Additional analysis to determine how regularly you breach your contracted capacity can also influence whether you manage energy better at the site or start the process to increase your capacity with your DNO.
If you are receiving continual Excess Capacity Charges on your electricity bill, contact us, and we will resolve this for you.
Is my Authorised Capacity set at the right level?
Setting the right kVa is important
If your kVa is set too high, then you are paying more than you need. Every business with capacity charges should carry out regular analysis of their Maximum Demand to ensure it is set at the correct level.
Conversely, if it is set too low you will pay Excess Capacity charges. These charges are on average 73% higher than your normal rate and over a long period can mount significantly. We frequently find businesses with Excess Capacity charges
Would you like to carry out a review of your current maximum demand and ensure that it is set at the appropriate level to match your needs?
Where can I find my Allocated Site Capacity?
Your Capacity level should be itemised on your business electricity contract and on your energy bill. If you need help finding it, call us on 01252 33877 and we will help you find it.
How can the EAG help you with your Capacity Charges?
All EAG members who are subscribed to our reporting platform have the option to use the functionality of the Maximum Demand analytics module. This allows you to review your contracted capacities using up to 5 years of historic data with RAG (Red, Amber and Yellow) ratings to make things simple. Alternatively, an EAG consultant can arrange to do this for you.