Distribution Use of Systems charges (DUoS) is a time of use tariff similar to triads. However, DUoS happens on a daily basis and is added onto the monthly electricity bill. It is the charge for receiving electricity from the national transmission system and transferring it to the distribution level to be used in homes and businesses. Distribution Network Operators (DNOs) charge energy supply companies, such as British Gas, E.ON, and others, who then pass these charges onto electricity bills to cover the costs of installing, operating and maintaining the network. DUoS can account for up to 12% of the charges on an electricity bill for half-hour meter industrial and commercial customers.
Half-hourly DUoS charges are made up of four different charges:
- Capacity charge – Also known as the availability charge, this is a fixed daily charge that relates to the Maximum Import Capacity (MIC). MIC is the maximum demand of electricity a DNO has agreed to supply to a particular site.
- Reactive power charges – These are charges placed on certain high load, equipment such as air conditioning units, which lead to increased power flows on the network.
- Fixed charge – Regardless of how much electricity is actually consumed at a site, the electricity supplier still charges a fixed daily amount as part of the DUoS charges for maintenance of the network.
- Unit charges – These are charges associated with each unit of electricity used, representing the bill payer’s actual use of the distribution network.
In April 2013, DUoS charges increased between 5% and 24%, which has added 0.06p/kWh to 0.43kWh to the unit charge.
What drives DUoS charges?
There are a number of drivers for DUoS charges, including time of day and geography. DUoS charges, in particular unit charges, can vary in price depending on when the electricity is used. There are three different rates: red, amber and green. Red is for peak periods such as weekday afternoons after 4pm, amber covers the rest of the daytime whilst green includes nights and weekends.
This table from Hudson Energy shows the different peak, mid peak and off peak electricity consumption hours for each of the DNOs. So for those time periods which fall under red, electricity consumption will be at its most expensive for customers. DUoS charges also vary in different regions. Just like triads, DUoS charges will be highest where the demand for electricity is high and costs of upgrading the distribution network are high, such as London, and lowest in places like Scotland.
DUoS charges are then calculated on a variety of factors. These include:
- Type of site e.g. HH (Half Hourly metered)
- Agreed Export/Import Capacity (in kVA)
- Voltage Level: High Voltage (HV) or Low Voltage (LV)
- Line Loss Factor Class
These inputs are determined by the DNO to whose network the electricity is connected.
Managing DUoS Charges
Customers can save thousands of pounds just on unit charges alone which can make a significant difference on a yearly basis. There are several ways customers can reduce the amount of DUoS charges. By using electricity less during the red bands which is typically between 16:00 and 19:00 on weekdays, customers may be able to lower their DUoS charges to an extent, as charges are highest during this peak time band.
Businesses can also reduce their DUoS charges by installing power factor correcting equipment such as capacitors. This lessens the usage of reactive power and less electricity is lost therefore lowers DUoS charges. Another way in which businesses can reduce their DUoS charges is by making sure the site has the maximum import capacity that is actually necessary. For example, if the sites maximum import capacity is 400kVA and the site only uses 100kVA, then by lowering the maximum import capacity the company can save money because regardless of usage, they will get charged for the MIC in place.
With DUoS charges increasing yearly, businesses are becoming increasingly interested in finding ways to lower these charges and thereby lower their energy bills.