Excess Capacity Charge – act now or pay later

Excess Capacity Charge – act now or pay later

Electricity bills are set to rise again for many energy users. The Excess Capacity Charge will increase dramatically in 2018, by an average of 90%. You can act now to mitigate the impact later.

Another increase to your electricity bill

Many energy users could soon end up with higher electricity bills due to a previously discounted element. The Excess Capacity Charge will jump dramatically in 2018. While this may seem far away, this allows time to mitigate costs, rather than sit back and wait for the sharp increase in charges.

The Excess Capacity Charge is set to be more cost reflective. As a result, electricity distribution companies will be changing how they penalise consumers who use more energy than agreed.

Significant increase

Currently, the Excess Capacity Charge is set at the same level as standard capacity charges.

In April 2018, however, the penalty charge will increase – on average – by an estimated 90%. The actual scale of change will vary significantly from region to region, with the last industry estimates indicating an increase of between 36 and 183%.

Planned excess capacity charge

The unit charge for capacity is relatively small, with the costs for actual consumption generally higher. However, depending on the size of the business, the exposure to costs could still be significant.

Potential impact of increased Excess Capacity Charge

A business which uses around 2GWh per annum and exceeds their agreed capacity or Maximum Import Capacity (MIC) by just 10% could see a monthly increase in their distribution charges of between 2% and 7% based on DNO. If the issue is not rectified, this penalty will keep being charged every month, compounding the costs.

A larger site, using around 13GWh per year which also uses a similar amount more than agreed would face an extra 2% per month on their distribution costs, with the volume-based unit rates taking up a larger proportion of their final bill.

However, you can mitigate, or even cancel out these costs. Control your usage effectively and make sure to have the correct MIC agreed with your supplier.

Take control of your energy use

At Utilitywise we’re able to offer a number of related services to help our clients; from Intelligent Building Controls to Long-term Forecast reports, there are a number of ways we can help you reduce spend and better budget for these future cost increases.

We recommend assessing your capacity levels against your actual usage to see if you’re at risk of rising charges. Our Capacity Review service can do just that. The Utilitywise Market Intelligence team can review your electricity capacity to make sure you’re not paying over the odds.

You can find out more about our Capacity Review service here.

Paul Anderson

Posted by on Wednesday, the 9. November at 9.18

Paul Anderson joined Utilitywise in 2000 as a member of the Market Intelligence team.As a Senior Analyst, Paul is responsible for the production of bespoke strategic consultancy projects as well as developing analytical models. This has included a market-leading Triad forecasting model and a fully inclusive delivered energy pricing forecast tool. Paul has an Honours degree in Film and English from the University of Kent.