What is P272?
P272 is a proposed amendment to the Balancing and Settlement Code, the rules which define the balancing of electricity in the UK market. If accepted, the amendment will mandate the requirement for Half Hourly (HH) settlement of meters in Profile Classes 05-08 by 1 April 2017.
Linked to ongoing plans to upgrade the electricity market, it involves moving businesses currently operating under the Maximum Demand (MD) metering system to an Automated Meter Reading (AMR). MD categorises users according to their peak demand as a proportion of overall demand. AMR allows actual Half Hourly consumption data to be used for settlement, in the same way current HH meters are settled.
When is it being implemented?
P272 was originally proposed in 2011 and, following several modifications, Ofgem approved it in October 2014. The deadline for the switch to HH settlement is 1 April 2017.
Concerns were raised that the previous implementation date (April 2016) would not give sufficient time to transfer all sites, but Ofgem argued that an extension would not address the issues identified and would reduce the incentives for some suppliers to start migration. Despite this objection, an urgent modification proposal – P322 – has been fast-tracked for implementation in August 2015, which introduces new arrangements for the migration of sites with AMR meters installed onto HH settlements.
Who is affected?
Up to 160,000 meters in the UK are affected. Any business with a metering profile of 05, 06, 07, or 08 will be affected. Should P322 gain approval, those consumers already under contract will not see any changes until their contract expires (unless that date is beyond 2 November 2017). Some suppliers have already started quoting new business for affected customers as HH settled.
What will change?
Currently, users settled by profiles have the cost of meter installation, maintenance and readings included in their bills; they do not require additional side contracts or meter specific charges. P272 will introduce new contractual costs as part of the process.
Additional metering and data contracts – including Meter Operator (MOP) and Data Collector (DC) – will be required to cover the costs of meter installation and maintenance as well as recording and collecting the data. These aspects are currently included in the energy rate, but will be complex additions to a business’ energy bill, which vary significantly between providers. Consumers may also see increased charges, as suppliers pass on the cost of taking more frequent reads.
A previous modification required AMR installation by April 2014. With the majority of customers having an AMR meter installed, this has enabled a quicker change to HH settlement without the need to install a new meter.
What are the benefits?
By metering data in Half-Hourly intervals, electricity bills will be more reflective of a site’s power consumption. Customers will be able to more closely match tariffs to their usage. Accurate data generated for a site provides the tools for greater flexibility in the management of its energy. With HH data, suppliers that are better able to forecast demand will incur reduced operational and supply costs.
What are the challenges?
- Suppliers will incur higher costs to manage more frequent meter reads (though potentially this will be offset by other operational and supply cost savings).
- The use of HH data will lead to a more complex electricity bill, particularly as those affected will be accustomed to simpler bills. All Non-Commodity Cost charges may be itemised, leading to new charges added to a customer’s bill.
- HH settlement will lead to winners and losers amongst customers – current charges may not necessarily reflect when a customer uses their energy. With HH data suppliers will price the contract based on actual consumption.
- A user with high consumption during off-peak times would see lower rates than their current averaged charges. Conversely, those with high consumption during peak demand should see increased charges. However, as HH settlement is more cost-reflective, customers able to reduce usage during peak times would see lower prices, reflecting their cut in consumption.
How Utilitywise can help
Utilitywise are on hand to enable you to combat any of the challenges raised by HH settlement – we can help you to better understand when, where and how you’re using energy. Our below services will allow your business to take control and become more energy efficient.
Data Collection – if you use energy at peak times you’re likely to be adversely affected by the changes in meter. We help customers get fast, accurate consumption data on their usage. This is the first step to identifying when you use electricity, meaning you can take action to avoid consuming at times of high demand.
Metering Services – we can provide competitive prices on HH metering services to maintain your meters.
Procurement – you may benefit from a more suitable contract. We analyse supplier offerings using our expert knowledge and innovative systems to evaluate prices and find a contract that fits your business needs.
Bill Validation – your bills will become more complicated, as they will be based on your actual electricity consumption and may include itemised Non-Commodity Costs. We will check your invoices to make sure that all elements are correct.
Monitoring, metering and targeting – we can help you visualise your new rich meter data so you know exactly what you consume and when to target energy saving opportunities.
Bureau – Utilitywise will proactively manage data on your behalf to highlight trends, anomalies and opportunities.
These proposed changes don’t have to be a burden, see them as an opportunity to improve when and how you use energy. For further information or to take advantage of any of our above services, visit www.utilitywise.com, call 01527 511 757 or email email@example.com.