Each business pays for electricity Distribution costs, whether it’s seperated on their bill or built into the standard unit rates.
For Half Hourly metered customers, these are split on a Red, Amber and Green basis. Red being the peak demand times (typically 4pm-7pm Monday to Friday) whilst Green units are weekends and during the night.
Those businesses using a lot during the peak hours will pay more, whilst those using electricity during the night will pay less. Red costs are on average 9.75p/kWh, with some areas being as high as 24p/kWh. However Green units are just a fraction of that cost at under 0.01p/kWh on average.
Therefore if customers can ‘shift’ electricity usage from the Red time bands to Amber or Green, they’ll save money.
However – from April 2018 this might be all set to change.
Generally, in all areas except London (area code 12) from April 2018:
– Red units are FALLING, by an average of 43%
– Amber units are RISING, by an average of 89%
– Green units are RISING, by an average of 853%
The graphs below show the differences, with the very bottom graph showing how the cost split will be changing in 2018. You can see that Amber and Green units will still be much lower than Red, but the changes are significant.
So what does this actually mean for your business?
Firstly, those businesses that have made an effort to shift demand from Red time bands to Amber or Green now have less of an incentive to keep those changes. As Red units will cost less, and Amber/Green units cost more, the incentive for shifting demand is reduced.
Secondly, those businesses that aren’t reliant on peak demand, and have instead used electricity during Amber and Green times, may see a significant cost increase.
What can businesses do?
1) Contact us for an analysis to see if this change will affect you. Some businesses may see an increase, whilst on average some customer may see no real cost difference or even make a saving.
2) Get informed – Are you receiving all the information you can? We can arrange for monthly reports to be produced, giving you an insight into monthly costs, and helps show exactly when you’re using energy to identify possible wastage.
3) Prepare for the changes – although shifting demand from Red to Amber/Green bands will have less of an impact in 2018 than now, this could still help.
4) Consider purchasing differently – Do you prefer fixed rates, or would you prefer to have Distribution charges passed through at cost?
