Is Your Business a Large Energy User?

Changes to the Balancing and Settlement Code approved by Ofgem in October 2014, known as P272, altered how energy meters are now charged. In the past, these changes were only applicable to energy intensive businesses that had 00 meters. What now constitutes as a large business energy user has been expanded.

Any business that has an electricity meter with profile type 05-08, also referred to as a Maximum Demand meter, will necessitate receiving half-hourly (HH) billing. These changes have been in place since April 2017. Businesses that haven’t agreed a new contract since November 2015 and have moved over to HH billing at the time will be required to make the above change.

Across the UK, it is estimated that more than 160,000 meters will be affected. Further information on P272 is available in our detailed guide.

How will I know if my business is affected?

To quickly identify whether your business is now classed as a large user, you will need to check your electricity bill. Look out for the record of your Supply Number. This is also referred to as the MPAN (Meter Point Administration Number)

If you see the following digits on the upper left side of your bill, you will be on a Maximum Demand meter: 05, 06, 07 or 08. As a result of this, you’re now classed as a large user and will be billed half-hourly. Existing users who are already on a HH meter will see the 00 numbers correspond to this. You will not be affected if you see the following digits: 03 or 04.

Why am I now classed as a large user?

Most users will assume that their energy is sourced only from their supplier, although this isn’t quite the case. The Distribution Network Operator (DNO) for your region will send electricity to your provider. A little history – in the past the DNO was also a business’ energy supplier, before the market was de-regulated in 1998, it wasn’t possible to make a choice and the supplier of a business was determined by the company’s postcode. This is no longer the case.

Upon market deregulation, consumers suddenly had a lot more choice. This meant that a DNO was required to supply enough energy to a variety of providers for the region in question. With these changes being implemented, suppliers currently estimate how much energy they will require well in advance. This makes certain that they are able to supply business and domestic customers at the price promised.

However, one challenge when dealing with larger commercial users is that they need significantly more power than the average home user. For this reason, the premises must be monitored more closely to ensure that enough power is available under different conditions.

HH billing requires an Automated Meter Reading (AMR) meter to supply usage data directly to the supplier every 30 minutes. This has two benefits:

  • The supplier can now more precisely estimate the amount of electricity needed
  • Billing is far more accurate for the consumer

Usage levels must be increasingly specific to ensure that there isn’t a power outage that could affect business productivity, especially as supply margins become narrower.

When taking the above into account, it is clear why many large users may think that suppliers use this as a way to generate more revenue. Although, this is in fact incorrect. It is actually necessary to ensure that there is enough electricity to go around at an acceptable market rate.

How will being classed as a large user affect my energy bills?

Being classed as a large user does mean the possibility of your costs rising when billed on a half-hourly basis. This is due to the extra manpower needed to monitor a business’ usage, and not because business electricity and gas prices have increased. The aforementioned costs will be added to the final bill.

The supplier will be tasked with providing all half-hourly customers with a Meter Operator (MO). This person will be responsible for the installation and ongoing maintenance of your meter. A Data Collector (DC) is responsible for collecting meter readings and a Data Aggregator (DA) will monitor your usage.

Nevertheless, not everyone will see a larger sum on their bill. This is because HH billing enables usage data to be calculated far more accurately. A significant proportion of commercial customers will be all too familiar with suppliers overestimating their consumption in years past. This group of customers should ideally see a cost reduction on their commercial energy bill.

Working with a reputable Third-Party Intermediary (TPI) such as Utility Saving Expert is a reliable way to cut down on your electricity prices by finding a more competitive tariff.

What should I do if I’m still not sure?

After reading this, if you are still not sure about whether your business will be classed as a large user, we can hopefully clarify this for you. By granting us permission through a Letter of Authority (LoA), Utility Saving Expert is able to assess your current position. An LoA will allow us to collect the relevant information for you. Also, we will never enter into any type of contract without your explicit permission and there is no obligation on your part.

Through our transparent practices, we hope to save commercial energy customers as much as possible on their gas and electricity bills. See how much your business could save today with our online comparison tools.