A new survey has revealed that a vast majority of British retailers are unaware of the upcoming P272 legislation, which will change how energy is measured and charged for many businesses in the UK.
The figures showed that 81% had not heard of P272; alarmingly this figure was even greater amongst larger companies (those with over 500 employees). When asked to speculate as to what P272 might be, some responses included a chemical compound (15%), a type of sweetener (5%) and a space exploration project (2%)!
In fact, P272 is an industry change, which aims to give businesses bills based on more accurate data, benefitting both customers and the energy industry alike. This will be achieved by collecting data from advanced meters, through Automated Meter Readings (AMR), rather than through industry standard projections of their energy use.
There was very little awareness from business leaders that they could face changes to their energy charges. Nearly seven in ten (67%) surveyed were unaware of any cost implications; whereas a further two in ten (20%) said that they were not sure whether their bills would change. Adding to the confusion, 55% of respondents said they weren’t sure how many meters their business had.
Although cost implications will vary for each individual business, half-hourly meter contracts traditionally cost more than non-half-hourly meters. On average, customers who move to half-hourly meters can expect to see an increase of on average £230 per year per energy meter, and at most £429 for the same period. This means that a retailer with 500 sites could potentially experience an average increase of £115,000 during its first year. However, the more accurate data provided will allow customers who consume less energy at peak times to negotiate a reduced unit rate when their contract next comes up for renewal.
On the plus side, the majority of our respondents (54%) thought that half-hourly metering would allow them to have better control over their energy consumption, one of the key objectives of the P272 programme.
The proposed deadline for implementation was initially 1st April 2016; however the Balancing and Settlement Code (BSC) Panel, led by npower, asked for a phased approach to implementation and this proposal was recently accepted by Ofgem.
Wayne Mitchell, director of Markets & Innovation for npower Business Solutions, said: “We want to make sure our customers are always getting the best deal for their energy. Part of this commitment means making sure customers get the clearest, most accurate data about their consumption.
“We fully support the move to half-hourly metering, which is a critical part of ensuring British businesses are more engaged in their energy management. However, the changes required are highly complex and will involve suppliers making major changes to their ‘back office’ systems, at a time of great flux in the energy industry. Suppliers need to be given time to adapt their infrastructure to ensure that the reclassification process can run smoothly and according to schedule.
“Ofgem’s extension, which we lobbied extensively for, will provide a longer window for businesses which need it, as opposed to a hasty and potentially flawed roll-out.”
Robert Jarrett, Professional Services and Special Projects director at BIRA, said: “We welcome the fact that npower business solutions are educating the business community on these very important changes, as our members will be equally unaware of the impact they will have on their costs.
“Retailers are already under pressure to make ends meet, so it will be essential for them to react in the right way and to manage their energy usage more efficiently going forward, to mitigate any additional costs that will arise. Whilst we can understand the logic behind the changes being proposed we do wonder if Ofgem has given sufficient consideration to the impact on businesses and to maximising the awareness of this change. BIRA is able to provide guidance to its own members on this subject.”
