Avoid penalty charges with our ratchet notification service
A Ratchet is a penalty charge incurred by gas consumers during the winter period (October to May) when demand for energy is at its highest. Ratchet penalties apply to all Class 1 and Class 2 meters (previously known as Daily Metered (DM) meters) when their daily metered consumption capacity, known as Users Daily Quantity Off-taken (UDQO) exceeds their agreed daily capacity, known as the Daily Metered Supply Offtake Quantity (DMSOQ). The penalty cost depends on how much the UDQO consumption exceeds the DMSOQ.
Ratchet penalties for Class 1 and Class 2 meters are calculated differently, due to the Network Modification 665: Changes to the ratchet regime for Class 1 and Class 2 penalties.
Rachet penalties may simply occur due to an increase in gas consumption that has not been accounted for in your supply contract. However, they are more often caused by metering issues, such as the following:
Suppliers receive a notification when a customer exceeds their agreed capacity (DMSOQ), from which they have five days to investigate the consumption before a ratchet is raised. If you find your gas consumption has increased, it is important to contact your supplier to review your DMSOQ as soon as possible.
Gas customers at Brook Green Supply have access to our Ratchet Notification Customer Service throughout the winter period. This service will alert you when you are at risk of reaching or exceeding your DMSOQ, so it can be reviewed and adjusted if necessary to avoid a ratchet penalty. Your DMSOQ can be reviewed and increased all year round, and we can provide the information required to make an informed decision.
*If you anticipate your consumption will consistently be more than 85% but below breaching the DMSOQ, please contact us to increase this percentage for you.
**If your Client Relationship Manager cannot get in touch with you and you do not respond prior to the date stated on the provisional ratchet notification, a ratchet penalty may be raised and invoiced within the following three months.
Class 1:
Class 2:
Class 1 ratchet penalties are calculated by comparing the actual capacity used (UDQO) with the relevant capacity transportation charges based on your agreed capacity (DMSOQ). The difference between the two is then doubled (this encourages behaviour change) to become the ratchet charge, and penalise consumers exceeding their DMSOQ.
Your capacity charge is calculated based on the number of kilowatt-hours you have booked daily from your Local Distribution Zone (LDZ) and is comprised of the System Capacity Charge, Customer Capacity Charge, and Exit Capacity (ECN) Charge.
During the ratchet season, a sites’ DMSOQ automatically increases once it is breached. This will continue each time your UDQO exceeds your DMSOQ, until the supply reaches the maximum amount of capacity available to you, known as Provisional Maximum Supply Capacity (PMSOQ).
Please note we can calculate your PMSOQ indicatively as explained above. If requested, we can approach industry partners to establish your current PMSOQ. Please be aware that it may take some time to receive the information.
The formula for calculating a Class 1 ratchet penalty is as follows:
Examples of a Class 1 ratchet and how it is calculated
The one-off penalty for this ratchet would be £93,440.00
Penalty Calculation
Charge Type |
Charges on the UDQO (2,200,000 kWh) Pence per kWh |
Charge on the Current DMSOQ (2,000,000 kWh) Pence per kWh |
LDZ System Capacity Charges | 0.0529 (A) | 0.0540 (E) |
LDZ Customer Capacity Charges | 0.0046 (B) | 0.0470 (F) |
ECN Charge | 0.0185 (C) | 0.0185 (G) |
Transportation Charges (based on 2020 calculations) - These charges have been calculated using the industry standard transportation charge calculator
(((A + B + C) * D) * 365 – ((E + F + G) * H) * 365))*J = Ratchet Penalty
Penalty Calculation
Charge Type |
Charges on the UDQO (2,300,000 kWh) Pence per kWh |
Charge on the Current DMSOQ (2,200,000 kWh) Pence per kWh |
LDZ System Capacity Charges | 0.0524 (A) | 0.0524 (E) |
LDZ Customer Capacity Charges | 0.0046 (B) | 0.0046 (F) |
ECN Charge | 0.00185 (C) | 0.00185 (G) |
Transportation Charges (based on 2020 calculations) - These charges have been calculated using the industry standard transportation charge calculator
(((A + B + C) * D) * 365 – ((E + F + G) * H) * 365))*J = Ratchet Penalty:
Class 2 ratchet penalties are calculated by comparing the actual capacity used (UDQO) with the relevant capacity transportation charges based on your agreed capacity (DMSOQ). The difference between the two is then multiplied by the number that has elapsed from the beginning of the gas year (1st October) to the day that you exceeded your DMSOQ, or the last time you changed your DMSOQ. This is due to the fact that Class 2 meters consume much smaller volumes.
Your capacity charge is calculated based on the number of kilowatt-hours you have booked daily from your Local Distribution Zone (LDZ) and is comprised of the System Capacity Charge, Customer Capacity Charge, and Exit Capacity (ECN) Charge.
*A Class 2 ratchet charge is the sum of the following:
Examples of a Class 2 ratchet and how it is calculated
Penalty Calculation
Charge Type |
Charges on the UDQO (80,000 kWh) Pence per kWh |
Charge on the Current DMSOQ (50,000 kWh) Pence per kWh |
LDZ System Capacity Charges | 0.06644 (A) | 0.0763 (E) |
LDZ Customer Capacity Charges | 0.0065 (B) | 0.0072 (F) |
LDZ ECN Charge | 0.0196 (C) | 0.0196 (G) |
Transportation Charges (based on 2020 calculations) - These charges have been calculated using the industry standard transportation charge calculator
(((A + B + C) * D) – ((E + F + G) * H)) * J / 365 = Ratchet Penalty
Days to 15 January 2021 from 1 October 2020 = 107
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