P272?

P272 is the umbrella reference for a number of electricity industry changes that could ultimately impact how you pay for your electricity.

From April 2017 the way in which approximately 160,000 non-domestic electricity consumers pay for their electricity will change.  This could affect the amount you pay for your electricity.  In some cases, customers could be left paying 30% above the best market rates.

 

How do I know if this affects me?

Your electricity bill will contain a unique reference for each supply.  If your supply number (MPAN) begins with either a 05, 06, 07 or 08 (profile classes 5 – 8), your supply is captured by P272 and you need to consider taking action. You can find this reference on your bill (see example below).

 

 

 

 

 

What will change?

Currently, all large consumers pay for their electricity on a half hour by half hour (HH) basis with higher prices paid at peak times (e.g. winter weekday afternoons) and lower prices paid at times of lower demand (e.g. summer nights).  In addition, charges relating to the use of the supply network are levied based on the peak demand requirements of the customer.  Metering charges are also separately identified.

For smaller customers, currently, the industry applies an assumed HH profile for each supply (e.g. profile classes 5 – 8) based on periodic meter reads.  Your supplier is able to use this profile to bundle together all charges outlined above into a single tariff which typically comprises a fixed charge, plus a variable charge per unit of electricity used.  The assumed HH profile is used by the industry in a process called “settlement” to calculate the sums due to the network operators and generators.

From April 2017 all profile class 5 – 8 consumers will be billed based on their actual HH profiles with network charges levied based on peak demand and separate metering charges.  This may involve changing your meter, although, in most cases, your supplier will simply enable existing functionality.

The transition to these new arrangements will take place between November 2016 and April 2017.

 

Why the changes?

This programme is part of a wider series of initiatives which cascades all the way down to the domestic level where all meters are being upgraded to “smart” meters.  These changes will ensure that customers are billed in a timely manner based on accurate records of electricity consumption.  In addition HH information will enable network operators to better plan their investments in upgrading the grid and will help National Grid fulfil their obligation to ensure that generation and demand are constantly in balance, thus helping improve the security of supply on a national and local level.

Over time, these changes will effectively increase costs for consumers that “stress” the energy “system” and reward customers who are able to reduce “stress”.  In practice this means that consumers who have peak loads at peak times (e.g. winter weekday afternoons) will pay more for their electricity and those that have more balanced loads (or can partially manage their peaks) will pay less.

How might P272 affect me? – Do I need to do anything?

Different suppliers will take different approaches under the new arrangements and during the transition.  Some suppliers will move customers on to default rates which could lead to higher bills, others will bundle all costs together into a single charge and others will provide full transparency of all the cost elements on the customers’ bills.  No doubt there will be winners and losers during this change and companies need to take early action to ensure that their interests are protected and to ensure they obtain best value for their business.

 

What should I consider?

Whilst this list will vary on a business by business basis, 5 things to consider include:

1. “Out-of-contract” default rates can be 30 – 40% higher than “in-contract” rates
2. Am I able to compare “apples with apples” when looking at quotes from different suppliers? Are there any hidden fess or comissions?
3. Do I want to consider appointing my own metering agents to ensure I have access to my data irrespective of who the supplier is? (This means I can see my consumption data down to a half-hourly level in near real time and use this information to help manage my energy better, support energy savings initiatives, identify and track trends, validate my bills and provide reporting information for schemes such as CRC, ESOS, ISO50001 and ISO 18001.)
4. Am I paying the correct charges to my supplier?
5. Are my capacity charges appropriate for my business? (All supplies have a capacity charge which is effectively a charge for the reservation of maximum demand capacity on the supply network and will vary across Great Britain.)

 

Can Servest help?

If you would like to discuss how these changes could affect your business and how Servest can help, email P272@servest.co.uk and one of the team will call to help you.

Servest is also able to support you on a range of other energy matters, including; energy procurement, bill verification, energy monitoring and reporting, energy audits and energy use reduction projects.

To find out more about these services, click here

 

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