How de-aggregating gas meters will increase costs

What’s an aggregated gas supply?

Aggregated gas supplies are created when two or more meter points are joined
together to form one supply point, and are billed and priced together. In the past aggregation was generally allowed when meter points were used by the same person or business for the same purpose, and they were close together.

What’s changed?

In 2013 Ofgem, the energy industry regulator, announced that the rules on
aggregated gas supplies were changing. From April 2014, no new aggregations
could be created and by 01 July 2015, all existing aggregations will need to be
split into single supply points. This process is known as de-aggregation.
It is a mandatory change that will impact all energy suppliers and all customers with an aggregated supply. This change is referred to in the industry as Modification 428.

Why is the change needed?

Some customers with aggregated supplies get reduced transportation charges as the more gas that’s used by a supply point, the cheaper the transportation charges tend to be per kWh. The industry believe this should lead to more cost-reflective transportation charges for all meter points and therefore for all customers.

What does this mean for my gas accounts?

Higher costs, more paperwork as each supply will know be billed separately and more complications in the contract negotiation and management.  This will also increase the likelihood of billing errors occurring.

Transportation charges typically represent around 16% of the overall bill, so they can be significant – especially when considered along with the volume discounts which will also be lost. We have seen examples where de-aggregation will increase costs by £15,000 annually for a single site.

There are no public figures for the number of sites involved, but 1 of the Big Six suppliers has confirmed to us that they have over almost 2,000 sites to de-aggregate so the potential impact is very significant.

If you’re worried about how this will affect you please get in touch.