Your electricity bill is made up of many different elements and you
are charged using many different methodologies.

Your distribution costs are made up of two main charges. The first is charged based on what time you are using energy with a Red, Amber and Green (RAG) structure. The second charge is based on how much energy you are provisioned to use – this is called your Supply Capacity.

 

Red, Amber and Green (RAG)

This charge is designed to influence the time of day that electricity is used with peak charges in the Red band falling at peak times of day for the electricity network.

What do you pay?

Each Distribution Network has set prices and times for the Red, Amber and Green periods in pence/kWh.

Minimising your costs

Reducing your consumption during the most expensive times of day by shifting load to other times or switching to on-site generation or battery power can save you money.

 

Supply Capacity

Before a site is connected to the Distribution Network, a capacity needs to be agreed between the site occupier and the Distribution Network Operator (DNO). You are then charged based on this agreed capacity in kilo-Volt Amperes (kVA). This is sometimes referred to as your Available Supply Capacity (ASC) or Maximum Import Capacity (MIC).

What do you pay?

Each Distribution Network has set prices for Capacity and Exceeded Capacity in pence/kVA/day. The excess capacity charge is higher than the capacity charge and aims to penalise those that use more electricity than has been agreed in their connection agreement. Although these are daily rates, you are more likely to see this as a monthly value in your bill.

Minimising your costs

You are able to change your capacity once a year by applying to your Distribution Network Operator.

There are two scenarios where you can reduce what you pay for your Supply Capacity.

1. If you use significantly less than your agreed Supply Capacity then you are paying your capacity that you do not need. Reducing your capacity to a more optimal level would reduce your Capacity Charge.
2. If you exceed your agreed Supply Capacity then you will be incurring excess capacity charges. Increasing your capacity to a more optimal level would mitigate excess capacity charges.

 

Other distribution charges

Reactive Power

Reactive power is ‘unusable’ power incurred most commonly by equipment that contains components which act as Inductors, predominantly motors. Reactive power generates the magnetic fields enabling inductive electrical equipment to operate.

Additional current is required to account for reactive power and significant requirements for reactive power results in local supply quality issues. A levy is therefore charged on some bills to encourage customers to take steps to reduce their reactive power.

Reactive power is measured in kVAr (kilo-Volt Amperes reactive).

Reactive power can be reduced by specifying equipment designed to reduce the amount of reactive power which they incur, e.g. motors equipped with variable speed drives.

Where equipment, that incurs significant amounts of reactive power cannot be replaced, their effect can be mitigated by installing power factor correction equipment.

Standing Charge

Distribution costs often include a standing charge (p/day). These are dependent on your Distribution Network Operator.

 

Analysing your distribution costs