DCP 228 (DuoS Rates Changes)

What is DCP 228?

DCP stands for Distribution Connection and Use of System Agreement (DCUSA). DCP 228 spread the energy costs more equally throughout the day.

Until recently, Distribution Use of System (DUoS) costs are at their highest for half-hourly consumers during late afternoon – or the so-called ‘Red Band’ – meaning a large percentage of distribution company revenue comes from premium pricing in this period. The consensus is that costs need to be spread more equally throughout the day, leading OFGEM to strike more of a balance between the DUoS bandings (Red, Amber, and Green).

These changes have taken effect from April 1st, 2018.

What are Distribution Use of System (DUoS) charges?

These are the charges to cover the costs of managing and distributing electricity within local distribution networks, managed by the respective Distribution Network Operator (DNO).

The DUOS charges are broken down into three bands (R-A-G), which represent different levels of power demand from the grid, occurring at varying time periods:

Red (highest unit rate)
Amber (mid unit rate)
Green (lowest unit rate)

History of the DUoS charges:

Previously, DUoS costs were significantly highest for half-hourly consumers during the Red band period; late afternoon, often between 4 pm – 7 pm. This is what drove OFGEM to change the cost method, to make pricing fairer and more accurate.

What has changed?

OFGEM has implemented DCP 228 from April, 1st 2018, with some of the following changes taking effect:

  • The biggest cost impact will affect high voltage sites
  • Red band DUoS charges have decreased but remain more expensive than the green and amber periods
  • Both Green and Amber band charges have increased but remain much lower than the Red band costs

DUoS costs are likely to increase further in the future as management of the distribution system becomes more challenging as we move further towards more intermittent power supplies.

Who is affected?

Most businesses with half-hourly meters and pass-through contracts will see a rise in energy costs, although those with high usage at peak periods (Red and Amber) could possibly see a small reduction. These costs will also be dependent on the customer’s respective DNO.

How can businesses reduce costs?

Because the prices are pre-determined at DNO level, businesses can do little to avoid alterations in how energy is priced.

  • Energy consumption reduction will now have a much more significant impact on costs for businesses
  • Large energy-consuming plants will have increased benefit from on-site power sources such as Biomass, CHP or Solar
  • Depending on the flexibility of the business, operational changes can be made to effectively manage consumption

How Pulse Business Energy can help:

  • We can provide Profile Alerts to help businesses anticipate TRIAD periods
  • Identify peak consumption periods and advise on effective power-downs
  • Demand-side response
  • Onsite energy generation
  • Commercial energy storage

 

Do you need expert advice on DCP 228?

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