How DCP 228 Changed Duos Methodology
As of the 1st of April 2018, DCP 228 (a regulatory change imitative) was introduced by OFGEM. This initiative aims to modify the way electricity distribution charges are calculated.
Who does DCP 228 apply to?
All businesses will be affected by DCP 228. The only exclusions are the UK’s larger electricity connectors, whose charges are governed by the Extra High Voltage Distribution Charging Methodology (EHVDCM).
How will your business be affected?
The DCP 228 has changed the way that business properties are billed for their energy. Distribution charges make up about 19% of your energy bills. The main distribution charge is DUoS (Distribution Use of System). This correlates to energy usage and is calculated using a Red, Amber and Green banding system.
The introduction of DCP 228 affects the Distribution Use of System (DUoS) charges as well as the differences between Half-Hourly and Non-Half-Hourly customers – which is likely to be considerable. Many half-hourly businesses will see a rise in energy costs, although those with a high use at peak times may see a small decrease in energy costs.
The level of impact will be based on:
- DNO (Distribution Network Operator)
Why the changes?
The motivation behind the modification being approved was due to its cost-saving benefits. DCP 228 revises how DUoS charges are calculated so that they accurately reflect the network operator costs during peak and non-peak periods.
In sum, the impact of DCP 228 will be most felt in distribution network areas – domestic and non-domestic ‘single rate’ consumers would usually see a reduction in charges as opposed to ‘two rate’ consumers who would likely face a small charge increase.
Half-Hourly customers will see unit charges dropping during the Red period, but an increase during amber and green periods. Half-Hourly customers will experience rising charges although high voltage (HV) customers will face the most significant increases. Furthermore, costs will be determined by the local Distribution Network Operators (DNOs) which means that costs will differ from region to region.
What can I do?
- Re-examine the times at which you use energy can help reduce energy costs.
- Try use energy when tariff rates are at their lowest
- Contact a Smarter Business energy broker to help you identify ways to mitigate the impact of DCP 228 on your business, identify potential energy efficiencies and reduce your energy costs.