CEC or Basket Deal

Group Purchasing Arrangements or Basket Deals as they are commonly known are put together to buy bulk energy with the objective of individual members securing a lower contract price than they would on their own. They can work well if all members of the Basket have similar requirements and a good credit rating, but the reality is that this is generally not the case. The result is that larger users or those with an excellent credit rating typically subsidise others.

Negotiations are pretty inflexible too with the date for acceptance of a new supply contract set well in advance, irrespective of changing market conditions. Basket Deals are usually set up by brokers who
negotiate the group deal on a commission basis. Their commission is factored into the price you pay.

The fundamental questions you need to ask yourselves are:

  • Do you want to retain control of the energy buying process, or are you prepared to hand over decision making to a third party?
  • Do you want to be just one small part of a “super customer”, or do you want the best possible deal tailored specifically for your organisation?

This table illustrates the difference in approach between CEC and a typical Basket Deal arrangement:

CEC
Basket Deal
Tailored negotiations specific to your business Yes No
Blanket negotiations for all members No Yes
Keep control of decision making Yes No
Ensure timing reflects market conditions Yes No
Control who you are contracting with Yes No
Know what price you will pay before committing Yes No
Control length and type of contract Yes No
Receive commission from suppliers No Yes
Have preferred suppliers (highest commission?) No Yes
Handle administration free of charge Yes No
Conduct audits to identify and recover overcharges Yes No
Monitor future bills and secure corrections Yes No

The CEC approach is one of complete flexibility, allowing you to exploit the opportunities that a volatile energy market can create. We will appoint a senior analyst to look after your account, and they will negotiate the best possible deal in the prevailing market conditions. They will discuss and agree a strategy with you every step of the way, share market intelligence, and present recommendations that help you make a considered decision about your future supplies.

With CEC, you retain complete control of the process. You are free to negotiate with any potential sup-plier yourself. We only get paid if we can better the deal you would otherwise accept.


Water Market De-regulation

Most businesses will be aware that the retail water market opened to competition for non-domestic users on 1st April 2017. We have been actively working with our existing clients to help them make an informed decision on action they should take. If you are not a client and have been considering whether to work with a broker that is pushing discounted water terms, there are points that you should consider very carefully.

Background

The market opened for competition in Scotland back in 2008 and this is being used as the model for England (not Wales – they voted against it). Initially the discounts were small but eventually increased and we suspect that may be reflected south of border.

Why Is This?

The regulator in Scotland carried out an audit of the water companies and analysed where the greatest margin (or profit) was possible. When the market opened the retailers offered modest discounts which the regulator did not challenge. The reason being the regulator knew the system was not robust enough to cope with a large number of businesses changing supplier or negotiating discounts all at once.

What Happened Next?

After the systems had proved themselves, the regulator – using the results of the audit, insisted the water retailers pass on improved discounts to the end user. This increased savings from around 5% to 20 -25%. This was not back dated, it was only available to new customers.

Will This Happen In England?

Possibly… We suspect discounts will increase over time but it is unlikely they will reach the figures in Scotland. Estimates suggest this will be nearer 12-15%.

So Is It worth Waiting?

If the pattern in Scotland is repeated in England, then the answer is yes. Water retailers claim there is very little money in retail so any reduction will be minimal. They would say that, wouldn’t they? The honest answer is we don’t know, but from empirical evidence we believe a delay where there is not a significant financial benefit in making an early decision, might be beneficial.

But My Broker Is Urging Me to Sign Now

They might well be and that could be for reasons of self-interest. After all, a broker is likely to be getting an introduction fee or commission from a supplier, possibly a supplier that they are working exclusively with. Remember that once a long term contract is signed, regardless of any frustration that it has become uncompetitive in a short space of time, it will be legally binding.

All Brokers Are Independent – Right?

That depends on the meaning of independent. Just because a broker says they ae independent really doesn’t mean that they are. It is the same for energy arrangements where more often than not an ‘independent’ broker might have very cosy relationships with 1 or 2 suppliers and as such they limit their client’s ability to access the ‘whole’ market.

There Must Be Some Advantages Of Committing Early?

There are but they are not necessarily financial. Consolidated billing is a big plus for any multi-locational operation. At present they could receive bills from up to 22 different companies in England so having a single account and payment to make each month makes life a lot easier. A single point of contact and managed relationship with one supplier can also provide a significant but less tangible financial benefit

What to Do Next

If you are an existing client your analyst will already be working on this for you or had initial conversations about your options. If you are not a client, please feel free to get in touch.


Fixed or Flexible Energy Contract?

Should I opt for a fixed or flexible contract arrangement? An increasing common dilemma for businesses now that flexible Energy supply contracts are becoming an option for supplies with an annual consumption of less than 10,000,000 kWh (10 GWh). Both strategies have their merits and as is often the case when the outcome under the option chosen doesn’t look as good as the alternative may have looked, there is a tendency to question the decision.

The UK Energy markets are notoriously volatile and it is important to take a long term view and not look at performance over a period of a few months, specifically with a flexible purchasing option. Nobody has a crystal ball (although there are many energy brokers that may talk as if they have) and a decision has to be made based on facts and figures available at the time.

We work with our clients to tailor an approach and purchasing strategy that meets the specific requirements of their business. They are very much part of the decision making process and will not feel like they have been bamboozled into signing a contract with an overly complex charging structure. Sadly there are many energy brokers that do just that, and we often engage with new clients that committed to flexible energy contracts for lengthy periods without an understanding of what they were signing up to. Once we investigate, we usually find that it was on the pretence of ‘access to the wholesale market’ under the false belief that if it sounds complicated, it must be good.

A simple overview of the main contract options and how we would work with you, obvious pros & cons and the associated risk of each (in terms of exposure to volatility) is as follows. There are of course many subtle variations to each:

Fixed Price Contract Strategy

Adopting a watch and wait strategy, we would use market information and bespoke tracking reports to identify market lows. On the day both parties agree it seems appropriate to commit to a new contract, we would recommend signing a fixed price contract with the supplier that provides the most cost effective arrangement for the supply period in question.

Pros – Price certainty for the supply period allowing accurate accruals and budgeting

Cons – If the market were to fall, there would be no option to take advantage of a lower price until the next renewal

Risk – Low

Simple Flexible Contract Strategy

We would seek an appropriate supplier for you to commit to purchasing under a flexible contract, linked to a suitable market index for an agreed supply period. You would be involved in the decision making process, taking into account supplier management fees and whether to fix all non-commodity cost elements ahead of the contract start date

From the date a flexible contract is agreed, you would have the option of being able to fix a price (in whole months) for forward supply periods in or out of sequence, effectively allowing you to make 12 purchasing decisions (rather than one decision on one day) for each contract year.

We would provide you with regular market information to help make decisions on forward fixing volume together with regular performance reports, and we would always be on hand to provide a market view and opinion.

Pros – The ability to take advantage of market trends and cap costs during volatile supply periods (say, winter only). A fair element of price certainty and the potential to gain a financial benefit if the market were to fall significantly.

Cons – A contract price that during certain periods could be very high where volume has not been fixed.

Risk – Low/Medium

Fully Flexible Contract Strategy – with forward fix and Re-float options

As with the simple flexible contract strategy, we would seek an appropriate supplier for you to commit to purchasing under a fully flexible contract, linked to a suitable market index for an agreed supply period. You would be involved in the decision making process, taking into account supplier management fees and we would explain how all non-commodity costs elements will be charged at the prevailing rate throughout the supply period.

From the date a flexible contract is agreed, you would have the option of being able to fix prices for forward supply periods for part or all of each month of supply, in or out of sequence. This allows multiple purchasing decisions to be made, effectively giving you the ability hedge and spread risk during each contract year.

You would also have the option to re-float and re-fix forward volume that had been purchased allowing you to take advantage of any significant fall in market prices. Any unhedged volume for each month of supply would default to an agreed index with a single weighted average unit price applied for each month

Again, we would provide you with regular market information to help make decisions on forward fixing volume together with regular performance reports, and we would always be on hand to provide a market view and opinion.

Pros – A contract price set by market fundamentals, not speculation. An immediate financial benefit if the market falls and the potential to make a good saving against a fixed price alterative.

Cons – A variable contract price that during certain supply periods, could be very high (although would average out).

Risk – Medium


Setting a Benchmark

Under a shared savings working arrangement, our fees are derived from the additional financial benefit our involvement brings to a business. As such, it is vital that our clients are clear they are receiving a genuine benefit from the service that we provide.

How do I know the saving is genuine?

We will always seek to establish a working framework with you, which will ensure we tailor our services to the needs of your business. By setting an agreed benchmark in advance of any work we undertake, we can ensure that there are no grey areas which could lead to confusion and you can be clear on the genuine benefit our advice brings.

To ensure any new supply contract reflects the needs of your business, it is essential you keep us advised of any significant changes to your usage (planned or otherwise), which could impact on your overall energy expenditure.

I would like to set my own benchmark?

For contract renewals, you could opt to test the market yourself and put forward an offer you would otherwise accept as the benchmark. In doing so, it would be important to acknowledge that your own activity should cease at that point and any cost improvements secured thereafter would quite correctly be considered a result of our advice. To avoid duplication of effort, it would also be sensible for you advise us of suppliers you intend to approach directly.

Although you are at liberty to do so, our advice would be not to use a third party to test the market for you, as it could result in a higher benchmark if a broker commission has been built into the offer.

I don’t have time to set my own benchmark?

Many of our clients want a fully managed service, neither having the time, resources or expertise to deal with such matters. If you do not have time to undertake work on an Energy supply contract renewal, the only realistic option would be to continue with the incumbent supplier at their renewal offer or be charged at out of contract rates.

For this reason, in the absence of a client derived benchmark, we would use a theoretical one, the most logical source being the renewal offer from the incumbent supplier. The renewal offer used will always be relevant to the point of concluding your contract, unless of course you specifically set a deadline and we advise you against this to your financial benefit.

We will never take advantage of huge variations in market prices when determining a benchmark (e.g. obtaining a renewal offer one month and finalising a contract several months later) and the benchmark set would always be agreed by you.

I would rather not work on a shared savings basis?

We work for a number of our existing clients on a fixed fee basis to deal with contract renewals and these are available on request. However, shared savings remains the most common and preferred method for the vast majority of our clients.


Utility Consumption Reporting

The most effective way of saving money is simply use less. Sounds simple enough but for most businesses, the bill received at the end of the month simply does not provide enough information to determine where the focus needs to be placed.

With an increasing number of businesses requiring energy and carbon monitoring reports for Energy Efficiency Schemes or to comply with ISO standards, access to more detailed consumption information is becoming essential. For clients that have AMRs (Automatic Meter Readers) installed via a recommended Meter Asset Provider or adopt our recommendation to appoint their own Data Collector, we are able to provide a utility consumption reporting service. Simple visual reports would be emailed to your desktop at agreed frequencies.

Examples of our reports and their key features are shown below.

Weekly Report Features

Usage Totals
Load Profile
Key Demand Profiles
Carbon Emitted
Available for Electricity, Gas, Water

Monthly Report Features

Daily consumption breakdown
Comparison against previous months
Key Demand Profiles
Carbon Emitted
Performance Targeting
Available for Electricity, Gas, Water

Annual Report Features

Monthly consumption breakdown
Monthly Peak Demand Profiles
Breakdown of DUoS Consumption Time bands
Carbon Emitted
Available for Electricity, Gas, Water


AMR (Automatic Meter Readers)

What is AMR

Automatic Meter Readers (AMRs or SMART Meters as they are sometimes called) provide suppliers with a cost effective solution to obtaining meter reads on supplies that would otherwise need to be physically read. They are also capable of providing end users with information to help monitor and control consumption.

Do AMRs have to be installed

For many years, metering that records detailed consumption information has been mandatory for larger Electricity & Gas supplies. As of April 2009, legislation was introduced meaning that all commercial Electricity and Gas supplies above a certain size now have to have an AMR installed.

The Potential Problem

Many Energy suppliers have been forging partnerships with metering companies, and have begun installing AMRs under the headline that they are free of charge. The reality is that under a supply arrangement with your chosen supplier, part of the monthly standing charge includes a cost element which they pay to an agency to physically read your meter.

For an electricity supply, this would typically equate to an annual charge of around £80 ~ a charge that you do not directly see. By arranging installation of a ‘free’ AMR, suppliers are simply re-directing these funds to a preferred metering provider to install an AMR on their behalf. Furthermore, consumption data from these meters would be ‘owned’ by the supplier, and the metering provider would generally aim to sell services that provide access to detailed usage information.

The Solution

To avert potential problems, we recommend signing an AMR agreement independent to a supply contract, which would mean you have a portable metering arrangement and more importantly, own and have access to your data.

Although a stand-alone AMR metering contract would not be without cost, this should really be considered as part of the overall charge for a supply. Under the arrangements we would recommend, the annual charge would be in the order of £87(1)/annum/meter (ex VAT) for Electricity and £80/annum/meter (ex VAT) for Gas, though depending the on supplier, this could be offset by the removal of the metering charge element within the standing charge, in which cases the project would be a cost neutral exercise.

The Benefits

There would also be a number of direct and indirect financial benefits that could further offset this none of which – other than the elimination of estimated readings – will apply to supplier installed ‘free’ equipment.

Accurate Supply Billing – supplier invoices should ultimately be based on actual meter reads.

Cost optimisation through more effective tariff management – having access to accurate supply data will help us to determine the optimum tariff format for each supply point and better manage supply costs. It could also allow us to improve terms, if we can demonstrate to a supplier that the assigned profile code (MPAN) is incorrect.

Monthly Accrual Reports – we would be able to provide monthly reports on projected costs that will allow you to budget with greater accuracy.

Potential energy savings through consumption monitoring – Using data from AMRs, we would be able to provide regular consumption reports that could help initiate behavioural changes within your organisation to reduce consumption and in turn costs.

(1) Average annual cost under a typical 5 year Electricity AMR agreement – year 1 £280.80, years 2 to 5 £35.70/annum


Appointing a Data Collector

What is a Data Collector and do I have to appoint one?

It is mandatory for customers with larger Half-Hourly metered electricity supplies to appoint agents to act as Meter Operator (often referred to as the MOP) and Data Collector (the DC). A MOP installs a meter and communication link on the electricity supply at your property whereas the DC’s role is to collect and distribute your meter’s usage data to the relevant parties, so they can bill each other and ultimately you via your supplier.

Whilst most customers have a MOP contract and pay an annual charge to the appointed party, charges for DC services are generally recovered by your supplier who appoint a DC on your behalf. Some build the cost into their monthly standing charge, others show it as a monthly Settlement Charge. Where transparent, the monthly Settlement Charge varies from supplier to supplier but is usually in the order of £13.75 to £20.75/ month/ meter (£165 to £249/annum).

Do I have to allow my supplier to do this on my behalf?

The simple answer is no. For customers with Half-Hourly electricity supplies, our recommendation would always be that you give due consideration to appointing your own Data Collector (DC), rather than allowing your supplier to do so on your behalf. One big advantage is access to consumption data; you and Control Energy Costs as your consultant would have direct access to Day+1 detailed consumption data and metering information via a web portal.

With the roll out of the CRC Energy Efficiency Scheme and increasing numbers of clients that need to comply with ISO standards, monitoring your energy usage is becoming increasingly important. Direct access to your metering data allows us to seamlessly provide you with detailed consumption and costs reports.

What will it cost me?

Our recommendation would be that you enter into an independent DC agreement with an approved service provider, typically at a cost of £130/annum/supply point (ex VAT). This would be subject to an industry standard five year agreement, as with your existing MOP service agreement.

However, as supplier invoiced DC charges would disappear from your monthly invoices, in the vast majority of situations, appointing your own DC will provide a financial benefit; it depends on your existing electricity supplier. The table below illustrates the financial differential with the 6 major electricity suppliers:-

 

Supplier
Annual DC Charge
Transparent
Annual Differential
EDF Energy £249.00 Yes -£119.00
Eon Energy £220.00 No -£90.00
Scottish & Southern £185.00 No -£55.00
Scottish Power £180.00 Yes -£50.00
British Gas Business £165.00 Yes -£35.00
Npower £165.00 Yes -£35.00

*Typical monthly cost under a fully inclusive supply contract with code of practice 5 metering


P272 – What Does It Mean?

Important notice regarding mandatory changes to electricity metering and charging

In a working arrangement with our clients, we aim to keep utility costs to a minimum and offer advice on legislative changes which have an impact on expenditure. A forthcoming change may affect some or all of your electricity supplies depending on how they are currently charged.

What is it?

P272, as it is known, is a mandatory directive to ensure all monthly maximum demand meters (i.e. MPANs beginning with an 05, 06, 07 or 08 profile class) are settled on a half hourly metered basis.

 

Why?

Ofgem, the industry regulator, is changing how business energy usage is metered and billed. Under the new regulation, all businesses using electricity meters in profile classes 05 – 08 must have AMR meters fitted. These meters read consumption on a half hourly basis and allow for more accurate settlement of internal charging within the industry. All suppliers must be able to bill on this basis from November 2015 and everyone must be transferred by 1st April 2017.

For some customers the impact of this change will result in a fall in spend, while for others costs will rise – it will depend on how much electricity you use and when in the day you use it.

Action Required

If you already have half hourly read metering in place no further action is required. However, if not, we strongly recommend you independently appoint an accredited Meter Operator (MOP) so that you have access to your metering data. This may not necessarily mean a new meter, as it may be possible to re-configure your existing meter. CEC are able to assist you in this process and help you secure competitively priced metering arrangements to ensure you are compliant with the new regulations.

If you opt not to appoint someone, your energy supplier will appoint their own MOP and pass this charge on which could be a lot higher than going direct.

To discuss options, please speak with your Analyst.


ESOS – A guide to compliance

What is it?

ESOS is a mandatory scheme requiring businesses of a certain size to undertake periodic energy audits of their business to identify energy savings opportunities. These energy audits will need to take place and be reported every 4 years.

Article 8 of the EU Energy Efficiency Directive requires all Member States are to introduce a programme of regular energy audits for “Large Organisations”. ESOS is the Government’s vehicle to meet this requirement, the aim being to improve recognition of energy efficiency opportunities in businesses that meet the qualification criteria.

Who will the scheme affect?

Any business with over 250 employees will need to take part. An employee is defined as a person employed under contracts of service. Their contracted hours and status, whether full or part time, are irrelevant to their classification as an employee.

If you have less than 250 employees but your annual turnover is more than €50 million and your balance sheet is in excess of €43 million, then you will also qualify.

If you do not directly meet this criteria and you are part of a group, then you may still be required to take part in the scheme. If any business within the group qualifies, then every company within that group must also qualify. Where such qualification applies, as with CRC, the group members can be disaggregated to allow them to report individually

How do I comply?

Unfortunately there are no shortcuts to compliance. Detailed information about your energy usage – including energy from fuel sources such as transport – will need to be gathered, assessed and stored in case of an audit. Only 90% of your total usage needs to be reported on and while for example that may mean transport could be discarded, you will still need to gather all of the information related to your transport usage to prove that you were correct to do this.

Unlike other energy initiatives from the Government, ESOS is quite vague and open to interpretation. This means there is no right or wrong but a compelling argument needs to be made to support any decisions, if the Lead Assessor is going to sign off that you have met the requirements and “spirit” of the Energy Savings Opportunity Scheme.

While a Lead Assessor will approve the work undertaken, the ultimate responsibility for reporting and complying lies with your organisation and a Director will need to sign a declaration within the Evidence Pack required to support your submission. Both the organisation and the signing Director can be liable for fines if a subsequent audit finds that ESOS has not been complied with, so it is important to take this seriously.

There are four logical stages to ensure you meet compliance…

Assessment

We would look to gain as much information as possible to be able to accurately assess the number of sites that will need to be surveyed, processes studied, etc. The number sites determined will be down to the activity there and how many properties you own are similar to each other. For example, retail chains or restaurant chains will only need to survey a small number of sites if they can be shown to be representative of others in the property portfolio.

You will also need to take into account any energy programmes already undertaken or you are currently involved in (e.g. CRC or CCA Agreements) and your transportation fuel requirement, which needs to be converted to a common denominator along with your energy usage.

At the end of this process, we will be able to give a cost to meet your ESOS objectives, including full compliance by the deadline. Please note that the quote can only be as accurate as the information that the scoping exercise can be based on. If the information is vague and or incomplete, we may need to add a separate contingency cost to cover any extra unplanned work involved by the assessment team (e.g. additional surveys, etc.). Our fees include the cost of full support if you are audited, which may not be the case elsewhere.

At the end of this process, we will formerly appoint a Lead Assessor for you, define the audit methodology and agree the timetable to complete this.

Surveying

As you would expect, this involves visiting pre-selected sites to record key information and understand the processes undertaken at the site. The thoroughness and cost of the survey will depend on your stated goals for ESOS – i.e. just seeking compliance will involve less work than seeking out more detailed saving opportunities via a mechanism such as Green Deal, etc.

Analysis & Reporting

Using all of the information gathered and the data obtained from the sites surveyed, the data collated will be analysed and a report on the savings opportunities and/or best practices drawn up. This will need to include need to include a Life Cycle Cost analysis, so you know what the full benefit of the advice will be against the cost of implementation.

Compliance

The ultimate responsibility for ensuring compliance belongs to your organisation and as advised at the beginning, a Director will need to sign off that the information provided is accurate and comprehensive.

Ahead of this, we will arrange a meeting for the findings to be presented and explained, providing a summary and a more detailed explanation at that time.

With both the designated Director and Lead Assessor happy that all the facts are known and compliance has been achieved, everything will be signed off and the separate submission to DECC will be made on your behalf.

In addition to compliance, it will be necessary to hold an ESOS evidence Pack for up to eight years in support of your submission. This must hold all of the information gathered to determine your energy use, the detailed calculations made and the methodology used when making any assumptions under the “comply or explain” approach regarding the requirement to use verifiable data.

Other Information

By its nature, ESOS compliance will be a collaborative effort. Most organisations will not have the time and or resources to undertake this themselves. We have entered a partnership with a specialist carbon management company that reflects our own values on how to work with clients and our drive to provide a cost effective service.


Control Energy Costs Glossary

Below we have a list of glossary of terms that we might use in some of our documentation.

Availability Charge

Availability charges are based on an agreed level of capacity with the Distribution Network Operator (DNO) and should be set at just above the anticipated maximum demand.

Baseload

The load continuously supplied or consumed by an electricity system over a period of time.

BUOS

Balancing use of system charges are levied by NGT via the supply bill to cover the costs of balancing the National Grid.

Climate Change Levy (CCL)

Tax introduced in April 2001 designed to provide an incentive to meet the UK’s environmental commitments made at the Kyoto Conference. Levy is based on the amount of energy  supplied  to  an  end-user. Certain  intensive energy using sectors have been granted discounts of 80% from the levy rates in return for reaching agreed emissions reduction targets. The levy is intended to be fiscally neutral and only applies to the industrial and commercial sector, not to domestic sector.

Combined Heat & Power (CHP)

CHP, or cogeneration, simultaneously generates useable heat and power in a single process, often installed on the site of industrial plant.

COP 3

Code of practice 3 meter – 1MW+ Sites, measuring electricity consumption at half-hourly intervals.

COP 5

Code of practice 5 meter – up to 1MW sites, measuring electricity consumption at half- hourly intervals.

Core MPAN

MPAN bottom line – indicates the distributor identifier, unique reference number and check digit.

Daily Metered (DM)

A gas supplies point whose consumption is measured each day by means of a data logger.

Daily Metered Customer (DMC)

An interruptible gas supply point or a gas supply point with an annual consumption greater than 58,600,000kWh which is individually nominated each day by a shipper.

Data Aggregator

The organisation appointed to  aggregate  electricity  meter- reading data received from Data Collectors to forward to suppliers.

Data Collector

The organisation responsible for collecting, processing and validating the meter- reading data, which is then passed on to the data aggregator.

Data Logger

Device fitted to a meter, which can record, store and transmit readings and measurements.

Distribution Losses

Charges relating to electrical losses which occur as electricity is transmitted through the lines of the local Distribution Network Operator (DNO).

DUOS

Distribution Use of Systems – charge levied by a DNO for the transmission of electricity through its local network

EHV

Extra High Voltage.

ELEXON

ELEXON  is  the  Balancing  and  Settlement Code  Company  –  procuring  and providing services to administer and implement the balancing and settlement rules. Signatories to the BSC contribute to the costs of ELEXON. Elexon charges are levied to recover the costs of running ELEXON.

Embedded Generation

Electricity generation by plant, which has been, connected to the distribution network of a Distribution Network Operator, rather than directly to the NGT’s transmission systems.

Emission Allowance

Typically, emissions reduction schemes set a cap for total emissions for each participant over a period and allocate each participant tradable unit, called emissions allowances, up to the cap. Participants buy and sell emissions allowances and at the end of the period must hold allowances or credits equal to their actual emissions to be in compliance.

Emissions Cap

The limit on emissions, in emission trading schemes, applicable to a participant over a period of time used to allocate emissions allowances.

Emission Credit

Countries and Companies can earn tradable emissions credits by undertaking projects that reduce emissions over and above what would occur in a business as usual scenario.

Emissions Trading

Countries and companies can trade emissions allowances and emissions credits.

Firm Gas

A guaranteed supply of natural gas that will not be subject to interruption.

Fossil Fuel

Coal, natural gas n fuels derived from petroleum are known as fossil fuels.

Fossil Fuel Levy (FFL)

Government tax collected by electricity suppliers to fund the decommissioning of Nuclear Reactors.  Although active, the levy is currently set at zero.

GSP

Grid Supply Point – point  between  Transmission  and distribution systems where responsibility for electricity supply transfers from NGC to the local REC.

GW

Gigawatt = 1,000MW or 1,000,000 kw

HH (Half Hourly)

Electricity supply taking more than 100kW maximum demand. These sites are fitted with electronic metering, connected to a communications device, which is downloaded remotely on a daily basis by the appointed Data Collector, to record electricity consumption for every half – hour period. MPAN has a profile class of 00.

HH Data

Half-Hourly data – electricity consumption data recorded every half-hour and collected by the metering system.

HV

High Voltage – supply voltage above 1000 volts (1kV)

Interconnector

Gas pipeline linking the UK and the continent.

Interruptible Gas

Gas supply that may be interrupted by Transco or supplier to assist in maintaining the Transmission/Distribution system, allowing supplies to firm gas consumers when there is a constraint on the system. Customers with an interruptible gas supply need to have an alternative power supply to switch to should an interruption to the gas supply occur.

KVA

Kilovolt-Ampere – a unit of electricity incorporating the reactive power component.

KW

Kilowatt – metric unit of power.

KWH

Kilowatt-hour – a measure of electricity consumed in an hour.

Line Loss Factor

Indicator, within MPAN, of distribution line loss for a meter point.

Load Factor

Ratio between average usage and maximum demand – Load Factor is calculated by the formula:
Load Factor = (total Units / (no. Of Hours x Maximum Demand) x 100%
The higher the load factor, the flatter a customers load shape is.

LV

Low Voltage – supply voltage below 1000volts.

Maximum Demand

The highest average demand occurring in a half hour period. Maximum demand tariffs comprise: a) fixed monthly charge: b) an availability charge per kVA  of  the  highest  demand  expected: c) a  price per unit for day and night units: d) a maximum demand charge based on the measured maximum number of units used in one half hour period in the month.

Meter Operation Agreement

Agreement between the customer and the nominated meter operator.

MIC

Maximum Import Capacity.

MEC

Maximum Export Capacity.

MOP

Meter Operator- the organisation appointed to install and maintain metering equipment.

MPAN

Meter Point Administration Number – unique number assigned to electricity meter by host REC under PRS (2-tier number printed on electricity invoices preceded by an S – top line referred to as Supplementary, bottom line as core). Also known as Supply Number.

MPAS

Meter Point Administration System- An MPAS holds data necessary to facilitate supply by any electricity supplier to all premises connected to the distribution system. The MPAS includes  an  enquiry service that provides relevant data to customers or electricity suppliers.

MPRN

Meter Point Reference Number- Gas meter reference number.

MW

Megawatt- 1,000kW

National Transmission System (NTS)

The high-pressure network of pipes that transports gas between the terminals, storage facilities and Local Distribution Zones for local distributions.

NATURAL GAS

Mixture of naturally occurring gasses found either in isolation or in underground reservoirs.

Network Code

Legal framework that defines the rights and obligations of Transco and gas Shippers/suppliers.

NGT

National Grid Transco – The Principle Network operator of national electricity grid and gas networks i.e. England and Wales.

NHH (Non-Half Hourly)

Commercial electricity supply consuming less than 100kW maximum demand. These are normally hand-held/ visually read by a Meter Reader on a Monthly or Quarterly basis. MPAN has a profile class of 03 to 08.

Nominated Consumption

Annual quantity of gas nominated by the customer as their annual estimated consumption requirement.

Non-Daily Metered (NDM)

Gas supply point whose meter is not fitted with a data logger and is read monthly, six monthly or at longer intervals.

OFGEM

Office of Gas and Electricity Markets- authority regulating the gas and electricity industries in Great Britain.

PGT

Public Gas Transporters- licensed gas pipeline operators.

Power Factor

The proportion of total energy supplied to a site, which is actually converted into useful energy output, as opposed to the wasted reactive power.

Profile Class

Profile allocated by MPAS to an electricity supply – first two numbers in MPAN top line (Supplementary Number):
00 Half hourly-metered supply
01 & 02 Domestic supplies
03 & 04 Non-Half Hourly supply, billed on a quarterly basis
05-08 Non-Half Hourly supply, profile according to load factor, billed on a monthly basis.

Reactive Power Charge (kVArh)

Charge for reactive energy if the average power factor falls below preset level, normally 0.9.

Renewable Energy

Generation of electricity from infinite resources, e.g. wind power or hydro-electricity.

Renewables Obligation (RO)

An obligation on electricity suppliers to source a specified percentage of the total electricity supplied to their customers in Great Britain is from eligible renewable sources evidenced by Renewable Obligation Certificates (ROC).

Renewable Obligation Certificates (ROC)

Tradable certificates issued to generators for each whole megawatt- hour of electricity generated from eligible renewable sources. ROCs can be converted into emissions allowances in the UK Greenhouse Gas Emissions Trading Scheme (UKETS).

Settlement Charge

A flat fee to cover the collection of second tier data by IMServ (data collection service).

Shipper

An organisation that contracts with Transco for the use of Network Code transportation and storage services.

Shipper Nominated Interruptible

A gas supply that can be interrupted by its shipper to enable the Shipper to balance its supply and demand.

Standing Charge

A charge designed to average over and recover  from  all  customers  on  each  tariff  the elements of cost, which are independent of usage; these include the costs associated with metering, billing and customer services.

Supply Point

Outlet of the gas Transporters metering facility at the customers premises.

Take-Or-Pay

A contract whereby a customer must pay for a specific quantity of gas irrespective of usage.

Tariff

Published standard charges applied to utility supplies that are not on a negotiated contract.

Therm

Imperial unit measurement of heat: 1 Therm = 100,000 British Thermal Units (BTU) = 29.3071kWh.

Transco

Transco provide gas transportation, metering and meter reading services throughout Great Britain for companies  the supply for operational reasons.

Tramision Losses

Charges relating to electrical losses, which occur as power is transmitted via National Grid.

Transportation Charge

The charges associated with transporting gas from the beach to the meter point. Prices are based on a distance related tariff system and vary demanding on interruptible and firm supply.

TRIAD

The three half-hourly periods in the year with peak electricity consumption, with each period at least 10 days apart, used to calculate the Transmission Charge for the MGC system.

TUOS

Transmission Use of System- charges levied by the NGT for the transmission of electricity through the National Grid.

TW

Terawatt = 1,000GW