New Energy Legislation – Are You Prepared For 1st April 2018? – By Melanie Kendall-Reid, Compliance Director
On 1st April 2018, there are important energy industry changes coming into effect. With only a few weeks to go, if you have not already taken action, now is the time.
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, it will be unlawful to agree a new lease for a commercial or 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 1st April 2023 for all privately rented property. MEES will apply to most private rentals however, properties that do not require an EPC under current 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, is coming into force to ensure that any half-hourly (HH) meter is billed fairly and correctly for its available capacity (kVA). From 1st April, DCP161 will ensure 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. Currently there is no penalty for exceeding the agreed level of kVA and any kVA used over the agreed amount is charged at the contracted price. The purpose behind the new legislation is for the excess capacity penalties being enforced to assist the Distribution Network Operators (DNO) with balancing out network usage. 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 will alter the way in which 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. As of 1st April, charges during Red Band periods will be lowered and increased during Amber and Green 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.
Energy Legislation Hub: http://www.energylegislation.co.uk/new-energy-legislation-prepared-1st-april-2018/