P272 Legislation – Your Business’ P272 Guide
What is P272 legislation?
P272 legislation has now been in place for over year. Implemented in April 2017, P272 is regarded as one of the most significant changes in the business energy market since deregulation.
Essentially, P272 is regulation for energy suppliers to use more detailed and accurate energy information about their customers’ consumption. Since April 2017, P272 legislation requires that all businesses in profile classes 5 to 8 have their energy use recorded every half hour, part of a process known as ‘settlement’. This mandatory regulation affects the way all electricity suppliers settle electricity consumption for businesses.
By licence, energy suppliers are required to take all reasonable steps to install half-hourly meters (HH) at the premises of customers in profile classes 5-8.
To quote OFGEM, the industry regulator: “The electricity settlement process set out in the Balancing and Settlement Code (BSC) places incentives on suppliers to buy energy to meet their customers’ demand” and “Suppliers have a licence obligation to supply larger non-domestic customers in Profile Classes 5-8 through an advanced meter that can record half-hourly consumption. BSC Modification Proposal 272 would require that these consumers are settled using their half-hourly data.”.
Why what P272 legislation implemented?
The revised Balancing and Settlement Code (BSC) Modifications mean that energy suppliers and generators have more accurate energy consumption data on which to base the settlement process.
During a settlement, suppliers and generators trade with each other to meet energy consumers’ need. For every half-hour period, they will compare:
- How much energy suppliers have bought
- The amount of energy consumers have used
- Then calculate the charges a supplier must pay to make up the difference
Before the new P272 legislation, the energy suppliers and generators would rely on estimated to work out customers’ energy consumption. With the installation of half-hourly meters, however, this data is accessible at their fingertips.
Does P272 legislation affect your business?
P272 applies to all businesses in profile classes 5-8. According to OFGEM’s P272 site, the legislation affects approximately 160,000 medium energy usage organisations in Britain.
How do I know the profile class of my business?
Take a look at the Meter Point Administration Number/Supply Number on your electricity bill – this is a legal requirement and you will find it on your bill, regardless of the supplier you use.
- If the first number in the box to the right of the ‘S’ is 05, 06, 07 or 08, then your business is affected by the changes.
- If the number is 01, 02, 03, 04 or 00, P272 does not affect your business.
What are the business benefits?
There are real potential benefits from using this improved energy consumption data stream to manage consumption and reduce costs. An example would be changing the schedule by which energy is consumed; heating and air-conditioning, machinery power and other uses can be rescheduled to avoid high costs.
Having access to half-hourly energy data will help your business manage and use energy more efficiently. With more understanding and insights into your electricity use, your business will have accurate information on which to base your energy management decisions.
- Get a more accurate energy bill, based on actual data instead of estimates
- Identify and maximise energy efficiencies
- Manage your energy consumption
- Reduce energy costs
- Suppliers have the opportunity to offer more bespoke deals tailored to your business’ individual energy use
Want to find out more about P272 legislation?
- Visit the OFGEM website
- Contact a Smarter Business energy broker for expert advice about the impact of P272 legislation on your business.