On 1st April 2018, important energy industry changes came into effect.
The Minimum Energy Efficiency Standards (MEES) is a set of legal requirements that aim to improve the energy efficiency of commercially-rented properties across England and Wales. From 1st April 2018, it became unlawful to agree a new lease for a commercial and domestic privately rented property with an Energy Performance Certificate (EPC) rating of F or G. This will also apply to all existing tenancies on 1st April 2020, and then all privately rented properties on 1st April 2023. MEES will apply to most private rentals however, properties that do not require an EPC under previous regulations (e.g. listed buildings) will not be required to comply. MEES does not apply to short lettings (six months or less) and lettings that are over 99 years. There are also a number of exemptions that can apply for properties with an EPC rating of an F or G.
DCP161, introduced by Ofgem, also came into force on 1st April 2018 to ensure that any half-hourly (HH) meter is billed fairly and correctly for its available capacity (kVA). The purpose behind this new legislation is for the excess capacity penalties being enforced to assist the Distribution Network Operators (DNO) with balancing out network usage. DCP161 ensures that HH electricity supplies that exceed their available capacity pay significantly more. Each HH meter across the UK has an agreed capacity level with the local distribution network and is charged at a rate which has been agreed within the supply contract. Previously there was no penalty for exceeding the agreed level of kVA and any kVA used over the agreed amount was charged at the contracted price. The legislation will help encourage customers to manage their load more diligently or to request the correct level of capacity upfront.
DCP228 was also introduced by Ofgem and came into force on 1st April 2018. It alters the way electricity distribution charges are calculated. Distribution charges are incurred by the network operators, charged on to the suppliers and passed on via the energy bill to the consumer. Distribution charges currently account for up to 19% of the bill. DCP228 aims to accurately reflect the distribution costs incurred by network operators during peak and non-peak periods. Bands are colour coded via a traffic light system to represent high, medium and low periods of demand. Since 1st April, charges during Red Band periods have been lowered and increased during Amber and Green periods levelling the charging structure and creating more of a balance across the bands. For customers on fixed price contracts, the costs are estimated using historic supply usage data and are included in the contracted costs. The change will have been anticipated when the current contract was put in place and increased costs are likely on renewal depending on the load profile of the supply. For consumers on energy only contracts, the revised costs will have an immediate impact on the bill as the new charges are passed through.
Only businesses that use the majority of its electricity during peak times may benefit from a small decrease on electricity bills. For the majority of half-hourly businesses, DCP 228 will bring a rise in energy costs. The level of impact will be driven by on the region and DNO with higher costs in areas of higher demand.
If you would like more information or to discuss how we can assist you in complying with the new legislation, please call us on 01252 878722 or email compliance@carbon2018.com