Not sure how Agreed Supply Capacity works? Well, it could be one of the biggest unnecessary overheads your business is currently shelling out for.
It’s not always easy running a business. For those organisations with large premises, a substantial payroll and tricky customers, there’s often a never-ending list of headaches, or shall we say challenges, to negotiate.
And if your company is heavily reliant on energy (as most businesses are in the modern day) then those pesky overheads and running costs certainly shouldn’t be overlooked. If you are operating heavy machinery or running lots of electrical equipment, the chances are that your electricity and gas bills run into the thousands each year.
But did you know that simply opening and paying your energy bills without question could be costing you more than you need to pay – even if you’re with the most competitive supplier and make sure that you turn off the lights at night. Let us introduce you to Agreed Supply Capacity.
What is Agreed Supply Capacity or ASC?
The ASC is the amount of electricity that your Distribution Network Operator, or DNO, must provide to your supply at all times. A DNO is a company licensed to distribute electricity in the UK; there are six of these organisations operating across the country.
The ASC is sometimes simply referred to as Supply Capacity, or Authorised Supply Capacity. It is measured in kVA and typically charged monthly for Half Hourly Supplies as a non-commodity charge.
Your ASC is present on your electricity bill, usually under the Distribution use of System section. Here you’ll be able to see your total distribution charge and a breakdown of how much ASC is contributing to this cost.
So, why would I pay too much if my ASC is high?
It’s important to understand how ASC charging works in order to work out whether you are being charged too much for your electricity usage. In simple terms, you are charged for the energy that is reserved for your premises, whether you use all of your quota or not.
Just as you wouldn’t take out a phone contract with 1000 free minutes per month if you only typically utilise 100; it doesn’t make financial sense to agree a large supply capacity if your business is economical with its energy usage. Of course, the aim is to be as close to your actual energy usage as possible.
You could also be paying for ASC you are not using if you have moved your business to new premises where the charge was set by the previous occupant. In this instance, the charge would have been carried over automatically to your Supplier Agreement even if there had been a change of supplier.
For example, if the previous tenants worked in heavy industry and had 15 machines drawing energy for 12 hours a day, 7 days a week, then you should be cautious about what your contract’s ASC contains if you plan to run just a few laptops and a kettle.
If you have (or plan to) take energy saving measures like turning off lights and installing more efficient services, this is great news. However, it may be undermined by the details of your contract. If this is the case, you’ll need to contact your DNO to switch to an ASC which better reflects your needs.
What charges are associated with going over your ASC?
As well as being charged too much for underutilising your ASC, you can also pay heavy surcharges for your ASC if you exceed your allowance.
If you have expanded your business activities on site without asking for the ASC to be increased, for instance, you may need to take a close look at your contract. These charges are referred to as ‘Excess Capacity’ charges and can cost a significant amount over time.
You only have one opportunity a year to change your ASC, and your DNO can reject a request to increase if it has an impact on other Suppliers in your area. This means any changes you make to your ASC should be considered carefully.
Has Agreed Supply Capacity got you scratching your head? Wish you could speak to some clever energy saving experts who can help you get your energy costs under control and on point? Get in touch with the friendly team here at The Energy Check today by calling 0191 691 18 02.
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