P272 OFGEM Legislation:
Will My Business Electricity Bills Go Up or Down?
P272 is a very important piece of Ofgem regulation that changed how business electricity users in profile classes 05-08 are charged for their power.
P272 came into effect on 5 November 2015 for all new and renewing contracts and will applied to all businesses in profile class 05-08 from 1 April 2017.
Since 6 April 2014, all business electricity users in these classes have been required to switch to advanced automatic meter reading (ARM) meters. While these meters could operate under half hourly (HH) contracts, there was no requirement for them to do so.
What P272 will do will bring large non-half hourly (NHH) energy users in line with half hourly energy users.
Will This Save My Business Money or End up Costing More?
That’s the big question and unfortunately there’s no straightforward answer. The only thing that can be said for sure is that half hourly contracts are fairer because they only charge for the power your business uses, when it uses it.
The main benefit of half hourly billing from a business owner’s point of view is that you get a lot more accurate data about your electricity usage. This data can be used to save money in a few ways.
- It can give you a much better idea of the likely ROI of energy efficiency investments.
- It can highlight when and where you’re spending the most money on power, which could then be used to shift usage to off-peak times.
- Gives you more data when looking to switch and/or renew contracts as you can sure that the rate you’re getting is best for your actual usage.
However, while the data can be used to help you save money, it also adds complexity and could result in you paying more if you’re not careful. Moreover, half hourly metering does impose some new costs that could end up increasing your bill, if other savings are not found through better use of data.
Finally, be aware that half hourly settlement requires you to have a Meter Operator (MOP) and a Data Collector (DC). These can be provided by your energy supplier but this is often not the cheapest option and you’re advised to shop around for both to get the best deal.
P272 Frequently Asked Questions
Why Did Ofgem Bring In P272?
Ofgem decided to implement P272, despite certain industry objections, because they’ve done research to suggest it will help to better balance the UK’s supply and demand for electricity, which means greater efficiency. This should in turn help reduce the UK’s CO2 and other greenhouse gas emissions.
You can read more about their reasoning here.
How Do I Know if I Have an Profile Class 05-08 Meter?
Look at your last energy bill or the MPAN number in the top left hand corner (just to the right of the S). If it says 05, 06, 07 or 08 then you have that class of meter.
Do I Need to Do Anything to Get Ready for P272?
Assuming your electricity usage puts you in profile class 05-08 and you have an existing advanced meter (AMR) set-up for non-half hourly billing, you will still have to implement a Change of Measurement Class (CoMC) to half hourly settlement.
You will also have to appoint a Meter Operator (MOP) and Data Collector (DC).
Finally, there may also be other changes you need to make, so you are advised to get started well in advance of your contract renewal date. See our guide to HH metering to learn more.
Will My Bill Change?
Yes, your bill is likely to be different after the change to an HH contract. While there’s no requirement for your supplier to bill you on an HH basis they are required to settle on it. Therefore, because you’re being charged on an HH basis you are advised to take advantage of the extra data provided.
How Many Business Are Affected by This Change?
It’s estimated that 160,000 meters across the UK will be affected by this change.
Will Businesses in Profile Class 03-04 Be Affected as Well?
At the current time they won’t be, but the long term plan is to also bring them into line with the settlement and data collection techniques used for half hourly customers.
What if I Want to Learn More?
If you’d like to learn more, please read our guide to half hourly metering.