Increased Electricity Distribution (DUOS) Charges For Manufacturers
Ofgem has announced that from 1st April 2018 the way Distribution Use Of System (DUOS) charges are levied and calculated will change.
At present there is a premium charged at peak times (16:00 19:00 winter weekdays), scaling down during the amber and green period (weekend & nights)
The changes flattens these charges out meaning the disparity between red, amber and green is reduced. The idea is that this makes charging fairer and more cost reflective, and to make users consider energy management across the whole day and not just at peak times. There will still be a higher charge at red times but it will be greatly reduced.
This reduces the incentive to reduce power at peak times and the biggest losers will be those who have taken steps to load manage. The winners will be users of energy at peak times largely the domestic market.
Whilst news that the cost of electricity during these peak hours will be reduced sounds good, unfortunately because a typical manufacturing company still uses the majority of their electricity during the amber and green times they will be significantly worse as the cost in these areas has increased dramatically. Therefore any gain via the reduced red zone charges will be outweighed by the overall increase.
Every distribution area across the UK will have different charges however for DNO 14 ( West Midlands) we have calculated the increased distribution costs for a typical manufacturing client to be:
Low Voltage Supply - 15% Increase
High Voltage Supply - 32% Increase
These charges make up a considerable amount of the invoice and as such need to be addressed properly and fully analysed. This is particularly relevant for Made In The Midlands members who are looking at new supply contracts as you will likely see a cost increase versus current contract but also energy brokers tend to not specialize in this much detail and may fabricate the true impact to you to get a supply contract signed.
We now work with 60 Made In The Midlands members and as ever would be delighted to have conversations with many more about what we do and how we can support the sector in both understanding their energy supply and reducing costs.
For further information or a bespoke report on how this will impact you directly please get in touch.
07501221728