Making Sense of Electricity Charges: What Does It Mean?
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Your business pays a lot of money on electricity charges. There are different kinds of electricity charges, meanings, and tariffs. You must understand what every charge means to make sense of them.
Knowing what electricity charges mean can save your business a lot of money. When you can make sense of these charges, you know where you are spending too much on electricity and where you can spend less. Using less electricity will cut down on your business’ charges, and ultimately, you will spend less on electricity.
One such charge is Maximum Demand, something your business can pay for without you even realizing it. Using the Utility Bidder website, http://www.utilitybidder.co.uk/, you can get more information about maximum Demand and how its meters and charges work.
What is Maximum Demand?
Distribution Network Operators (DNOs) use Maximum Demand on big electricity consumers to match electricity supply accurately and effectively with Demand on a national level. A ‘Maximum Demand’ charge might have been indicated on your electricity bill. Maximum Demand is a term used to describe the peak amount of power your business demands, not consumes, from the National Grid over a set period, specifically, every half-hour. Maximum Demand is shown as kilowatts (kW) or kilovolt-amperes (kVA).
Your business has to be in a particular profile class to be a maximum-demand customer. If your business falls in profile classes 05, 06, 07, or 08, it will apply to you. To see your business’s profile class, you must check the Meter Point Administration Number (MPAN) on your electricity bill. The number is commonly given in the ‘Supply Number’ box in a grid format and has 21 digits, usually starting with an S. The first two-digit number immediately to the right of the ‘S’ will indicate your profile class.
Even if you do not use the total capacity your business demands, the DNO will still add a maximum demand charge to your electricity bill. Maximum Demand refers to Maximum Import Capacity (MIC), the available supply capacity. This indicates the maximum electricity limit you expect your business to draw from the distribution system. Should your Maximum Demand exceed the agreed-upon MIC, your business must pay an excess capacity charge.
What is a Maximum Demand Meter, and how does it work?
As part of the UK’s continuing effort to create more innovative electricity networks that allow for a more effective balancing of power supply and Demand, there was a change in the Balancing and Settlement Code called P272. This code stated that from April 2017, all customers’ meters were to take readings every half-hour. These half-hourly settlements led to some customers seeing their bills stay the same, decrease, or increase. Those businesses seeing increased electricity charges have not reached the peak amount of power they demanded from the National Grid. Thus, they have to pay for the capacity their Distribution Network Operators have reserved on their network.
According to P272, rather than getting someone to come and take your business’ meter readings, the profile class 05-08 half-hourly meter automatically records electricity usage data every 30 minutes. This data is sent to your business’ power supplier for storage and analysis every half-hour using telecommunication. Suppliers use these more precise electricity usage readings to calculate your business’ electricity charges. They can then charge your business based on these more accurate charges.
How do Maximum Demand charges work?
Most commercial utility bills are divided into two main sections: energy consumption charges and energy demand charges. Energy consumption charges are the energy (kWh) your business consumes multiplied by the relevant energy price during the billing period. The energy demand charge is the maximum amount of power (kW) drawn during any given period, and in the case of Maximum Demand, that period is 30 minutes. This is then multiplied by the relevant price of energy.
Demand charges, or Capacity Charges, are the charges imposed by your DNO based on the agreed capacity for your business’s site. The official service capacity, or authorized service authority, of your business, is the amount of power the network reserved for your business to guarantee that you get a designated volume of electricity every half-hour.
How can Maximum Demand charges be reduced?
Capacity charges depend on the location where your business. Your authorized service capacity or availability charges are applied to your energy bill every month. The amount of electricity that you consume does not affect this availability charge. If your demand charges are too high, you will spend more money than you must. If this continues, your business will lose much money over time.
Ensure your business’s MIC charge corresponds to your peak power demand. If you suspect it is too high, contact your DNO to discuss the problem. It might be necessary to review your Maximum Demand to ensure your MIC charge is not too high.
Conclusion
Maximum Demand meter readings’ data help you look closer at your business’ power usage to understand your electricity charges better and buy electricity more cost-effectively. By making sense of your different electricity charges, you can save your business significant money. There is no need for your business to pay for more energy than it will be using.
