EiBI Howard Stark Article 2015

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Howard Stark Considers the Changes Happening in Metering Market (Pub. 2015)

In October 2014, Ofgem mandated that all larger non-domestic metering be traded half hourly by April 2016. Ofgem estimates that this decision affects 155,000 meters and will grow the size of the existing half hourly market from 115,000 to 270,000 metering systems.

Ofgem believes consumers will offset anticipated cost increases by shifting consumption out of high- to low-cost periods or to permanently reduce consumption during high-cost periods, so-called demand-side response.

This is possible in the longer term but, in the short term, this change is highly disruptive and will affect thousands of businesses. It will impact existing supply contracts, meter asset and meter operator agreements, data collection, and energy monitoring and related energy services. For many consumers, their bills will contain new charges which will they will be seeing for the first time. And all of this hot on the heels of ESOS.

The following extract from the Executive Summary of Ofgem’s 2013 Impact Assessment sets out their central proposition: “Our assessment suggests that settling consumers in Profile Classes 5-8 on actual half-hourly meter readings will enable suppliers to reduce the costs of purchasing and transporting energy to these consumers. The main way in which suppliers can reduce these costs is by encouraging demand-side response (DSR). This would require suppliers to innovate in the products and services they provide, helping to strengthen competitive pressure between them. Where consumers in Profile Classes 5-8 respond to these price signals, consumers can benefit from lower bills, stronger security of supply and a more sustainable electricity sector.” suggests that up to 80 percent of PC 5-8 meters fall into this category. For these meters, customers will now be presented with an array of relatively obscure non-commodity charges, including:

  • Site specific Distribution Use of System (DUoS);
  • Transmission Use of System (TUoS);
  • Authorised supply capacity; and
  • Reactive units.

All this in addition to a change to your kWh price.

Visibility on all charges

The only way to get visibility on all your charges, both commodity and non-commodity, is to purchase electricity through an energy pass through contract.

The most painful non-commodity charge is DUoS. All CT connected meters will incur site-specific DUoS charges. respective of the network operator, all DUoS tariffs for CT metered supplies have Time of Use charges. There are three-time bands:

Red, Amber and Green (RAG). The Red period runs from 16:30 to 19:00, Monday to Friday. London is the exception with two Red band periods.

The cost message of the RAG tariff is simple. The Red band is very expensive indeed and to offset this cost, consumers will need to implement demand-side response programmes and quickly get up to speed with new and more complex, cost reflective electricity tariffs.

Quite apart from the need to check that your final non-half hourly bill is correct, your first half hourly bill will likely feature a new set of (unfamiliar) charges. Here is a simple checklist for you to follow:

  • has the correct Line Loss Factor tariff been applied?
  • has the correct DUoS tariff been applied?
  • has the correct TUoS tariff been applied?
  • has the correct energy tariff been applied?
  • does the Authorised Supply Capacity charge reflect current maximum demand levels (adjusted for power factor)? and
  • what’s included in any unspecified ‘administration’ charges?The half hourly market is fully interoperable, that is, there are no commercial or technical barriers to nominating your preferred service providers for data collection, data aggregation, meter operation and online reporting.

Stark offers service continuity throughout the CoMC process, providing data for all stakeholders together with the online tools for:

  • cost control, both commodity and non-commodity charges;
  • budget setting, cost forecasting; and
  • monitoring and targeting: reducing energy waste, demand reduction, load shifting.

With thanks to Energy in Buildings & Industry for allowing Stark to reprint this article.