Supply capacity, kVA and three-phase charges: what to know and how to cut them

Larger business electricity supplies pay a network charge based on how much power the site is allowed to draw at once, called its agreed supply capacity, and measured in kVA. If you draw more than you have agreed, an excess capacity charge applies. If you have agreed far more than you need, you are paying for unused headroom. Small shops and offices on standard meters usually do not see any of this.

Single-phase and three-phase supplies

Most small premises have a single-phase supply: one live wire, enough for lighting, computers and everyday appliances. A three-phase supply has three live wires and carries more power more evenly. It is common where there are large motors, commercial kitchens, workshop machinery, lifts or fast EV chargers. Changing from single to three-phase is arranged through your network operator; cost and timescale depend on the local network, so get a quote early. See what is a three-phase supply and the glossary entry. Three-phase is a type of connection; capacity charges are a billing mechanism. Having three-phase does not by itself mean you pay capacity charges, but it often goes together with the larger, half-hourly-metered sites that do.

kW, kVA and reactive power

• kW: the useful power doing work, such as running a motor or a heater.
• kVA: the total power drawn from the grid, combining the useful part and a non-working part.
• Reactive power (kVAr): the non-working part, produced by equipment such as motors and transformers. One supplier guide says it is typically under 5% of overall demand at commercial sites with a reasonably efficient electrical system.

Capacity and maximum demand are both measured in kVA. Because kVA includes reactive power, poor efficiency (a low power factor) makes your kVA figure higher than your kW figure.

What "agreed supply capacity" is

This is the maximum power, in kVA, that your distribution network operator (DNO) has agreed you can draw. It is also called Maximum Import Capacity, Available Supply Capacity or agreed kVA, and it is normally shown on a recent bill. EDF compares it to a mobile contract: you pay for the agreed amount whether or not you use it all. The network charge is billed per kVA per day, set by your DNO's charging statement. See supply capacity, DUoS and TNUoS and DUoS charges for how network costs reach you.

What happens if you exceed it

Your maximum demand is the highest kVA you drew in the billing period. If that is above your agreed capacity, you pay an excess charge, at a higher rate, on each kVA over the limit, usually for the whole month. See what happens if I exceed my agreed capacity.

Worked example

One broker's guide gives this case: a site with agreed capacity of 370 kVA reaches 410 kVA, so the excess is 40 kVA. At an excess rate of 6.5p per kVA per day, that is £78 for a 30-day month (40 × £0.065 × 30).

My own example, with invented numbers: your agreed capacity is 100 kVA and a new machine pushes demand to 112 kVA in a 31-day month. Excess is 12 kVA, so 12 × £0.065 × 31 = £24.18. That looks small, but if it happens every month it is £24.18 × 12 = £290 a year, and the cheaper fix may be to raise the capacity or smooth the load.

Now the reverse. Suppose your agreed capacity is 100 kVA but your highest demand all year was 70 kVA. If your DNO's charging statement rate were 3p per kVA per day (a made-up figure), asking to drop to 80 kVA saves 20 × £0.03 × 365 = £219 a year. Check the real rate on your bill.

How to avoid excess and overpaying

1. Find your capacity and maximum demand on a bill, or ask your supplier or meter operator.
2. Review 12 months of half-hourly data to see your real peak. See half-hourly meters explained.
3. Stagger equipment start-up so motors, ovens and chargers do not all fire at the same moment.
4. Improve efficiency. Power factor correction equipment cuts reactive power. Ask an electrician.
5. Consider a battery to cover short peaks; see business battery storage.
6. Adjust the capacity with your DNO.

Changing your agreed capacity

EDF's guidance says: decreasing capacity is usually free, but it releases it to others and may not be available again later; increasing needs an application, may raise charges and can involve reinforcement costs; and changes are limited to once every 12 months. To ask, contact your DNO with your MPAN, site address, and the current and new capacity. The first two digits of the bottom row of your MPAN tell you which DNO; see find your MPAN and MPRN.

Cut capacity only if you are sure about future needs. Planning to add EV chargers, a kitchen or heat pumps? Keep headroom for them.

Reading the bill

Look for lines labelled capacity, availability, excess capacity or excess availability, and reactive power. Whether these are "pass-through" (charged at cost) or fixed in your contract changes your exposure; see pass-through vs fixed charges and reading your business energy bill. If a line seems wrong, ask for the figures and see what is a kVA charge on my bill.

Situations where capacity catches people out

• A new tenancy. The previous occupier's agreed capacity carries over with the supply point. A café moving into a former office may have far more, or far less, than it needs. Read moving premises and deemed contracts.
• Adding EV chargers. A few fast chargers can double peak demand in minutes; see workplace EV charging.
• Seasonal equipment. Air conditioning or a freezer room added in summer can set the annual peak.
• Moving to heat pumps or electric kitchens. Plan the capacity first, because increases can take time and cost money.

In each case, one half-hour spike can set your maximum demand for the month. The data shows which half-hour it was.

Next steps

1. Locate your agreed capacity (kVA) on your last bill.
2. Get your maximum demand for the last 12 months.
3. Compare them: persistent excess means raise it; a big gap means consider lowering.
4. Ask your supplier whether capacity charges are pass-through in your contract.