LR Senergy enables wind farm operator to recoup almost £1.5 million in incorrect charges
Friday, Jul 18, 2014
Leading global energy services company LR Senergy has helped a major wind farm operator to recoup almost £1.5 million in miscalculated Distribution Use of System (DUoS) charges following an investigation into the charging methodology applied at two Scottish wind farms.
LR Senergy was approached by the wind farm developer in 2012 to conduct an investigation into the DUoS charges implemented by the local Distribution Network Operator (DNO), Scottish Hydro Electric Power Distribution (SHEPD), at one of its sites between April 2006 and March 2012. The fees in question were higher than the expected for this particular wind farm.
All users connected to the distribution network must pay DUoS charges to the DNO for importing and exporting power to the network, and this dispute focused on the methodology and formula used by the DNO to calculate the import chargeable capacity of the site.
LR Senergy’s study revealed that the charging formulas being applied by SHEPD were in fact incorrect and this had resulted in a significant DUoS overcharge for the wind farm during the period in question. LR Senergy also calculated what it believed to be the correct charges and presented its findings to SHEPD, which referred the matter to OFGEM for determination. The firm successfully represented its client through a lengthy period of arbitration that concluded in a £700,000 rebate for the wind farm operator.
Having successfully resolved this first dispute, LR Senergy was then asked to conduct further investigations into another of the wind farm operator’s sites, also in the SHEPD area, which it suspected had been subject to the same billing methodology and overcharging issues by the DNO. Again LR Senergy’s study revealed that the wind farm had been overcharged DUoS and correct charges were calculated; another arbitration period ensued which ended with a £770,000 payout to the wind farm operator.
Dr Jason Hill, power engineering manager for UK & Northern Europe at LR Senergy, said: “The methods used in calculating DUoS charges involve a variety of factors and there is a potential for confusion. We would recommend that users seek professional advice if they are unsure whether the charges are correct.
“Around 12% of the total bill should be made up from DUoS charges and during the period in question this was considerably higher. We were asked to investigate by our client due to the excessive charges that were being applied.
"The Chargeable Capacity figure used to calculate part of DUoS charges due to the DNO is the higher of either the site’s Authorised Import Capacity or a figure calculated from the actual energy imported.
"In this case, the Authorised Import Capacity for site was 1MVA – a typical value for wind farm sites for supply of on-site loads. The DNO had calculated the Chargeable Capacity using values of reactive power import at times when the site was not importing active power, resulting in a significantly higher Chargeable Capacity than the Authorised Import Capacity and leading to high charges that did not accurately reflect the import of the site.
"LR Senergy considered that calculating import Chargeable Capacity at times of no active power import was not in accordance with the Ofgem approved methodology for calculating DUoS charges, however the DNO disagreed. After several attempts at resolving the dispute failed to reach an agreement, the matter was referred to Ofgem for determination.”
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