An insightful look at the key rules and regulations underpinning DUoS (Distribution Use of System) charges – typically 20 to 25% of the electricity bill. Learn about how the regulation is set and amended, opportunities and risks for your energy users, and get an update on recent and current changes and how they could impact you.

1. Energy Network Charging Policy
The Small Print
16th November 2016

2. Introduction
PCMG =
cost analysis &
recovery consultants
Martin Chitty
Director – Energy
Analysis at PCMG
Contracted with half
of the UK’s 30 largest
energy users
Specialists in
understanding and
challenging
regulatory policy and
charging
methodologies
£12 million
electricity & gas
cost recoveries every
year
Part of Ayming Group,
global business
performance
consulting firm with
1,300+ employees

3.  Network charges are rising each year – they are more relevant than ever.
 Dig deeper - you can no longer afford to ignore these charges.
Network Charges
Electricity Bill
Commodity
Distribution Losses
Transmission Losses
DUoS
TNUoS
BSUoS
RO
FIT
CFD
Elexon
AAHEDC
Capacity Market
CCL
28%
44%

4. DUoS – How Does It Work?
Electricity Bill
DNO
Charging
Statements
Distribution
Code
DCUSA
Electricity
Distribution
License
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Supplier – DNO Relationship
Reporting Requirements
Charging Methodologies
Service Levels
Connection Agreements

5. DCUSA – Distribution & Connection
Use of System Charging Agreement
Charging Methodologies

6. Changes to the DCUSA
DCMF MIG

DCP Working Group

Consultation

DCUSA Panel

Ofgem Approval

7. Current / Recent Changes
 DCP 274 – The Application of Export Capacity
Charges in the EDCM
 DCP 268 – DUoS Charging Using HH Settlement
Data
 DCP 243 – Treatment of Customer Contributions in
the CDCM
 DCP 228 – Revenue Matching in the CDCM
 DCP 227 – Removing the inconsistency in the
application of Peaking Probabilities in the CDCM
 DCP 222 - Non billing of excess Reactive Power
charges
 DCP 161 – Excess Capacity Charges
 DCP 138 – Implementation of alternative network
use factor (NUF) calculation method in EDCM
29Change
proposals
currently open
35Average change
proposals raised
annually

8. In detail: DCP 228
DCP 228 – Revenue Matching in the CDCM
Status: Approved, awaiting implementation date
 Changes how network running costs are allocated into tariffs
 For HH supplies the impact is a reduction of ‘Red’ costs and an increase in
‘Amber’ and ‘Green’ costs
 Impact differs by region, but overall it’s an increase in DUoS costs for non-
domestic customers
 Potentially undermines demand response activities
 P272 will mean more customers are impacted

9. In detail: DCP 228
EXAMPLE – Food Manufacturer
£1.1 million p/a electricity spend, based in South West England
 Currently reducing consumption at peak times to avoid
‘Red’ DUoS costs
 50% consumption reduction at ‘Red’ times = £71,000
annual saving
 Projected impact of DCP 228:
 Red tariff reduced from 19p -> 6.5p/kWh
 Saving from consumption reduction reduced to £24,000 – no longer viable
due to operational impact
 Accompanied by overall DUoS cost increase
 Total cost increase = £92,000 per annum (8.3%)

10. In detail: DCP 227
DCP 227 – Removing the inconsistency in the application of
Peaking Probabilities in the CDCM
Status: Approved, expected implementation date 01/04/2017
 Changes the assumptions that are used when tariffs are calculated
 Will generally result in a cost increase for customers
 DUoS cost increase ranges from 1% - 16% depending on region and DUoS tariff
 Particularly significant impact on 03 profile NHH sites in some regions
 Typical increase ~3%

11. In detail: DCP 161
DCP 161 – Excess Capacity Charges
Status: Approved, expected implementation date 01/04/2018
 Currently, in any month the higher of the maximum demand and available
capacity is billed
 This change means there will soon be penalties for any kVA used over and
above the available capacity
 Excess charge is likely to be x1.5 – x2 but may be up to x3 in some parts of the
country
 Impacts to energy users:
 Increases the risk associated with available capacity reductions
 Boosts the business case to increase capacity levels where they are being
exceeded
 Energy users need to keep a closer eye on their maximum demands /
available capacities

12. Getting Involved & Making
Your Voice Heard
 Sign up to and monitor the DCUSA website – www.dcusa.co.uk
 Attend DCMF / DCMF MIG meetings.
 Engage with DCP consultations.
 EDCM customers – ask for and validate your charging model inputs!
 Work with a company who is directly involved in the regulatory process.
How can you make
your voice heard in
terms of industry
changes that may
impact you?
How can you gain an
understanding of
future changes to
understand how they
will impact on your
forecasts?
How can you raise
concerns with DUoS
charging
methodologies?

13. Thank You.