Reconciliation information

If you have a flexible contract, some costs that make up your electricity invoice are forecast first and reconciled later, once actual figures have been published. These are referred to as pass through charges

This guide gives you full information on how the following charges are calculated and reconciled. Our team are always on hand to answer any questions.

 

 

Distribution Use of System (DUoS)Distribution Use of System (DUoS)

What is DUoS?

 
DUoS is the cost of maintaining the regional networks that transport electricity from the local sub-station to the end customer. This infrastructure is owned and operated by the DNO (Distribution Network Operator) in your area. DuoS costs are charged to generators and suppliers, and then recovered from electricity users.
 

How is DUoS calculated?

  
Each DNO publishes a forecast of charges in its region and suppliers use this as a basis for DUoS calculations.

DUoS charges include the following four components:
 

Volume. This charge relates to the amount of electricity consumed, which will vary according to the time of day. For half-hourly (HH) meters, the volume used during each half hour is multiplied by the rate charged at that time. These rates will also differ by DNO.
  

Capacity charge. This is a fixed daily charge set by the DNO, and is established according to the amount of electricity that is made available by the distributor to meet the customer’s maximum demand at any one time, (measured in kVA). This charge allows the distribution company to reserve that capacity on the local electricity network. If the maximum capacity is exceeded, excess capacity charges will apply.
 

Fixed charge. This a fixed cost charged by the DNO per meter type, for use of the network. A rate is published by the DNO for each meter type.
 

Reactive power. Reactive power is recorded by the meter and is charged at a pence/kVArh rate. It is the difference between the electricity supplied and the amount of that electricity that is converted into useful power. If a site has high reactive power, a large quantity of power is being wasted. This means that the DNO must direct more current into the site to provide the required output electricity. This places additional strain on the network and ultimately results in additional cost.
 

How is DUoS reconciled?

 
Applicable to customers with pass through DUoS charges as part of their contract.

Where DUoS is charged on a ‘pass through’ basis, it is regularly reconciled to adjust any difference between forecast and final cost. Reconciliations are on a per meter basis. 

For more information on DUoS visit http://www.energynetworks.org/electricity/regulation/distribution-charging/distribution-charges-overview.html or speak to your Account Manager.

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Assistance for Areas with High Electricity Distribution Costs ( AAHEDC)Assistance for Areas with High Electricity Distribution Costs ( AAHEDC)

What is AAHEDC?

  
The AAHEDC scheme is administered by National Grid and provides financial assistance to areas of the country with high distribution costs. This allows a reduction in the distribution charges in that area. Currently, the North of Scotland is the only area specified to receive assistance. Suppliers are all charged an amount by National Grid, and this is passed to Scottish Hydro Electric Power Distribution Ltd, to allow a reduction in costs for this area. 
  
Energy suppliers must pay National Grid a published amount based on total supplied volume. The cost is then passed onto all customers as a £/MWh charge. 
  

How are AAHEDC charges calculated?
 

AAHEDC runs in line with the financial year (1st April to 31st March). An estimate of consumption volume is forecast and a unit rate is calculated based on this volume and the total cost. This increases each year in line with the Retail Price Index (RPI). This estimate is made before the start of the financial year in March, and an indicative tariff is published at this time. The final tariff is published in mid-July after the financial year has started. 

How is AAHEDC reconciled?

   
Applicable to customers with pass through AAHEDC charges as part of their contract.
    
Where AAHEDC is charged on a ‘pass through’ basis, we compare the actual £/MWh charges with the estimated charges in the period and calculate the difference between these charges.
  
Three billing periods include estimated AAHEDC charges. These are reconciled once the actual cost is known in mid-July, and an invoice or credit note is issued. This adjusts any difference between the estimated and actual amounts.


For more details of the AAHEDC scheme visit http://www2.nationalgrid.com/UK/Industry-information/System-charges/Electricity-transmission/Assistance-for-areas-with-high-distribution-costs/ or speak to your Account Manager.

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Feed-in Tariff (FiT)Feed-in Tariff (FiT)

What is Feed-in Tariff (FiT)?

  
The Feed-in-Tariff (FiT) is a government programme to support the uptake of a range of small-scale renewable and low-carbon generation technologies. FIT’s are then paid to anyone who installs a renewable energy system producing electricity. Tariffs are paid for electricity that is generated with a bonus paid for any energy exported to the grid. 
  
The scheme requires electricity suppliers to pay into a fund, to cover the costs of those who produce energy under the scheme. The cost is then passed onto all electricity customers through their invoices. Amounts charged depend on volume consumed.
   

How are FiT charges calculated?

   
DONG Energy uses latest industry information to produce an estimate of what the actual cost will be, which is translated to a £/MWh charge. This is stated in your supply contract. This  estimate is then applied to your metered consumption and included in the calculation of your monthly invoice.
 

How are FiT charges reconciled? 

 
Applicable to customers with FiT charges as pass through costs in their contract. 
   
The FiT scheme operates in line with a standard financial year, 1st April to 31st March. FiT charges are regularly reconciled, and an adjustment is made once actual charges are published to accommodate any difference from forecasted costs. 
 
Each quarter, Ofgem leads a ‘levelisation’ report on their total volume of FiT-eligible generation. 
  
This is informed by figures from – 

  • FiT licensees – confirming the value of generation and export amounts

  • Electricity suppliers – confirming total electricity supplied in Great Britain

   
This means that Ofgem can calculate the FiT charge owed by each supplier for that levelisation period. The exercise ensures that all suppliers pay the same equivalent £/MWh cost. 
  
At the end of the financial year all parties are required to re-submit their figures to Ofgem. Ofgem then calculate whether a further levelisation payment is due and publish a final annual report. 
  

FiT Reconciliations

  

The FiT reconciliation takes place following the completion of the annual levelisation process in October. DONG Energy calculates any variance between the forecasted FiT £/MWh billed to date and the figure published in the annual report. Where a variance exists, an adjustment will be made to your October invoice (received in November) and a reconciliation line for FiT charges will appear. 
 
If you change supplier prior to the annual levelisation process, the reconciliation will still take place. You will receive an invoice or credit note as appropriate, subject to your standard payment terms. 
  
For more details on the Feed in Tariff scheme visit https://www.ofgem.gov.uk/environmental-programmes/feed-tariff-fit-scheme or speak to your Account Manager.

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Contracts for Difference (CfD) Contracts for Difference (CfD)

What is the CfD regulation?

  
The Contracts For Difference (CfD) regulation is an industry wide, compulsory subsidy scheme which supports low carbon electricity generation. Finalised in 2015 by DECC, it is part of an ongoing  Electricity Market Reform (EMR) policy. The scheme helps to fund the replacement of the UK’s ageing generation assets. It also ensures investment in a secure, affordable, sustainable supply for the future. 
 
The CfD scheme requires all suppliers to pay a levy to fund this ongoing development. This cost is then passed onto all electricity customers through their invoices. 
 
How are CfD charges calculated and reconciled?

The total CfD charge comprises two elements, shown as separate lines in your invoice. Amounts are calculated in £/MWh.
   

1) CfD Operational Levy. This fixed,annual charge covers the administrative costs of running the scheme. 
 

2) CfD Supplier Levy. This variable, quarterly charge covers the subsidy payments that CfD generators receive.  This is based on how much electricity they generate, and the market price for electricity. It is calculated and reconciled as follows:

  • A quarterly estimated amount is included on your invoice, shown as CfD Supplier Levy.

  • At the end of each quarter, we then compare the estimate against the actual charges and invoice this reconciled amount.

  • We will inform you of the rates applied when they are published and ahead of billing. This will avoid any unexpected extra charges on your invoice.

If you have any questions regarding the CfD scheme and rates, please speak to your Account Manager

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Triad chargesTriad charges

What are Triad charges?

  
Triad charges form part of Transmission Network Use of System (TNUoS) charges. Each year, licenced suppliers must pay TNUoS charges to National Grid to cover its costs of delivering electricity across the network. For half hourly meters TNUoS charges are directly passed through to customers from suppliers as Triad charges.
  
The ‘Triads’ are the three half hour periods of peak system demand over the winter period (November to February).
  
The peaks typically fall between 4pm and 7pm on weekdays during periods of cold weather. This is the time that industrial consumption often coincides with higher domestic consumption.

How are Triad charges calculated?
 

Triads are calculated as follows -

  • Triad periods are not known until after the winter period, so charges are estimated based on your usage. These are then reconciled in the following March.

  • These three triad periods must be ten days apart and large consumers are charged according to their usage during those three half hour periods.

  • Tariffs vary between each Distribution Network Operator and are set in January for the next Triad period.

  • An estimated daily £/day charge is stated within your supply agreement and is applied to every invoice for the duration of your contract.


How are Triad charges reconciled? 
 

Applicable to customers with half-hourly (HH) meters and pass through Triad charges as part of their contract.
  
Once the Triad period is over, and half-hourly meters have been read, the three periods of maximum demand are published by National Grid in March of each year.
  
Following this publication DONG Energy calculates any variance between invoiced Triad charges and the actual cost. Where a variance exists, an adjustment will be made to your April invoice (received in May) to include a reconciliation line for Triad charges. This adjusts any difference between forecast and final cost.
  
If you change supplier prior to the Triad reconciliation, the reconciliation will still take place. You will receive an invoice or credit note as appropriate, subject to your standard payment terms.
     
For more details on Triad charges visit http://www2.nationalgrid.com/UK/Industry-information/System-charges/Electricity-transmission/Transmission-network-use-of-system-charges/ or speak to your Account Manager.

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Residual Cashflow Reallocation Cashflow (RCRC)Residual Cashflow Reallocation Cashflow (RCRC)

What is RCRC?

 
RCRC relates to the capture of imbalance costs as part of the settlement process operated by Elexon. For each half hour period, Elexon calculates the total cost of imbalance that must be collected from Balancing Settlement Code (BSC) parties.
 

How is RCRC calculated?

 
Charges are calculated daily by Elexon and available on their online portal for each half hour period. DONG Energy uses this information to produce an estimate for your billing period, which will appear on your monthly invoice.
   

How are RCRC charges reconciled?

 
Applicable to customers with pass through RCRC charges as part of their contract.
 
Where RCRC is charged on a ‘pass through’ basis, it is regularly reconciled, meaning that an adjustment is made once actual charges are published, to accommodate for any difference from forecasted costs.
  
DONG Energy carries out an RCRC reconciliation monthly in arrears. If a variance is identified between the forecasted and published charge, an adjustment is applied to your next invoice on a monthly basis.
  
For more information on RCRC visit https://www.elexon.co.uk/reference/credit-pricing/trading-charges/ or speak to your Account Manager.

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Balancing System, Use of System (BSUoS)Balancing System, Use of System (BSUoS)

What is BSUoS?

 
National Grid is the system operator for the UK electricity infrastructure and has responsibility for keeping supply and demand balanced at all times.
 
To do this, National Grid increases or decreases the volume on the grid at short notice to achieve the necessary balance. The cost of balancing the system is charged to generators and suppliers, and then recovered from electricity users.
 

How are BSUoS charges calculated?

  
National Grid uses a detailed methodology to establish a daily BSUoS charge, taking into account the actual costs of balancing the system for each half hour period. They then provide a monthly forecast of BSUoS charges, which suppliers then apply to its customer’s invoices.
  

How are BSUoS charges reconciled?

  
DONG Energy carries out a monthly BSUoS reconciliation in arrears. If a variance is identified between the forecasted and published charge, an adjustment is applied to your next invoice on a monthly basis.  

For more information on BSUoS visit http://www2.nationalgrid.com/uk/Industry-information/System-charges/Electricity-transmission/Balancing-services-use-of-system-charges/ or speak to your Account Manager.

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​Jan ​Feb ​Mar ​Apr ​May ​Jun ​Jul ​Aug ​Sep ​Oct ​Nov ​Dec
​Triad
 
 
​FiT
 
 
 
 
​CfD
 
 
 
 
 
 
​AAHEDC
 
 
DUoS​ ​​As variance is identified
​BSUoS ​Each month in arrears
​RCRC ​Each month in arrears​

​The table below shows the typical reconciliation pattern for charges.