Guide to Reducing Supply Capacity Costs

With large half hourly electric supplies, you will normally see supply capacity charges on your invoices. Read our advice below on minimising these charges and ways of avoiding out of contract penalty charges.

Supply Capacity refers to the amount of electricity that your Distribution Network Operator (DNO) must make available to your business at all times.

Agreed Supply Capacity or Authorised Supply Capacity (ASC) is measured in KVA and charged monthly on your electricity supplier invoices.

As part of your supply contract, you will be quoted a Capacity rate (£/KVA). This can be negotiated at the point of agreeing the contract.

You are charged for all of your ASC regardless of whether or not you have reached your full capacity. If you exceed your ASC, your supplier will charge you an alternative rate (£/KVA). This alternative rate can also be negotiated and if not negotiated the supplier has the right to apply their deemed rate.

Impact of energy savings initiatives

If you have implemented any energy reduction initiatives, it’s likely it will have significantly reduced your demand on the network and therefore reduced the amount of capacity you require. You will notice your energy consumption drop on your supplier invoices but your ASC will remain the same unless you put in an application with the DNO to have this reduced.

New premises

A slightly different scenario, you may have moved to a new site where your processes have far more or far less demand on the network than the previous occupier’s processes. However, the energy supplier will bill you at the same ASC as the previous occupier until the DNO has instructed them otherwise.

Exceeding your Agreed Supply Capacity

As mentioned above, you can be penalised heavily by your energy supplier for exceeding your ASC so it’s important you set this at an accurate level and build in a buffer to allow for any random spikes in demand due to changes in processes/equipment.

How we can help

As part of our consultancy service, we always complete regular ASC analysis for our clients. Our detailed review enables us to advise clients where capacity reductions can be made and equally important, it flags up when an increase is required. We complete our analysis, present our recommendation, and once agreed by the client we liaise directly with the relevant DNO.

For some of our larger multi-site and manufacturing clients, the work has generated significant savings of up to £5k per annum.

If you would like a free no obligation review of your Supply Capacity charges or if you have been advised by an electrician that you need to apply for more capacity then please do get in touch.