kVA capacity charges explained: what businesses pay for agreed capacity

What is a kVA capacity charge?

Every business site with an electricity connection has an agreed amount of power it can draw from the network. For larger sites, this is set as a number of kilovolt amperes (kVA) in the connection agreement with the local network operator, and it's called the Maximum Import Capacity, or MIC.

The network operator charges your supplier a daily amount for each kVA of that capacity, and your supplier passes it on. That's the capacity charge. It's one of the distribution charges your supplier passes on, either within your business electricity rates or as a separate line on your bill.

You may see it called different things:

• On your bill: a capacity charge, an availability charge, or part of your DUoS (distribution) charges. National Grid Electricity Distribution says capacity charges may be shown on your bill as "DUoS".
• In your connection agreement: usually Maximum Import Capacity. National Grid Electricity Distribution also calls it Authorised Supply Capacity, and Ofgem sometimes calls it Agreed Supply Capacity.

The MIC is agreed with your network operator when your site is connected, or when your needs change later. SP Electricity North West notes that many MICs are legacy values from when the site was first connected.

kVA and kW: what's the difference?

Your unit charges are based on kWh, but your capacity is measured in kVA, and the two aren't the same.

• kW is active power: the power your equipment actually uses to do work.
• kVA is apparent power: the total power flowing through your connection, combining active power with reactive power (kVAr).

The link between them is the power factor. National Grid Electricity Distribution describes power factor as the relationship between kW and kVA, and says a power factor of 1 loads the network most efficiently. Power factor is kW divided by kVA. For example, 90 kW at a power factor of 0.9 is 100 kVA, and 95 kW at a power factor of 0.95 is also 100 kVA, so the better power factor gets 5 kW more useful power from the same capacity.

So equipment with a poor power factor, such as some electric motors and transformers, uses more of your kVA capacity for the same amount of useful power. It can also bring a reactive power charge.

Who pays a capacity charge?

Capacity charges apply to sites on "site-specific" network tariffs. These are half-hourly sites with current transformer (CT) metering, which are usually larger supplies. Our half-hourly meters guide explains which sites they are.

Most smaller businesses don't pay one. Sites on aggregated tariffs, which cover sites that aren't settled half-hourly and half-hourly sites with whole-current meters, pay a fixed daily charge and unit charges, with no capacity charge.

There's one temporary exception. Under an Ofgem decision called DCP414, CT-metered sites moving to half-hourly settlement don't pay capacity charges for 12 months after they move. After that, the network operator sets an MIC from their metered data and moves them onto a site-specific tariff. Many of these sites are moving in 2026, so if your site has just moved, a capacity charge may appear on your bill a year later.

How the capacity charge is worked out

The charge is based on the MIC you've agreed, not on what you use:

Take a site in Eastern England with a 100 kVA MIC. At the 2026/27 rate of 8.04p per kVA per day, its capacity charge is £8.04 a day, or about £2,935 a year, whether it uses that capacity or not.

These are the 2026/27 capacity rates for low-voltage site-specific tariffs, from each network operator's schedule of charges:

These are the charges your supplier pays for your site. Sites connected at high voltage, or directly at a substation, are on different tariffs, with their own rates. How they reach your bill depends on your contract. Our guide to DUoS charges shows the other parts of these tariffs, including the red, amber and green unit rates.

What happens if you go over your agreed capacity?

Your connection agreement requires you to keep your import within your MIC. If you go over, two things can happen.

You pay an exceeded capacity charge. Your network operator works out your demand in kVA for every half hour, from your half-hourly kWh and kVArh readings. The highest half hour in the billing period counts, so a single half hour above your MIC is enough. The excess is charged per kVA per day on the difference between your MIC and the capacity you actually used, for the whole billing period in which it happened.

For 2026/27, the exceeded capacity rate is the same as the capacity rate on low-voltage site-specific tariffs in every area. Some network operators' older guidance still says excess capacity is charged at a higher rate, but that isn't the case in the 2026/27 charges. Rates are set each year, so check the current charges for your area.

For example, if that Eastern England site with a 100 kVA MIC reached 115 kVA in one half hour of a 31-day billing period, it would pay exceeded capacity on 15 kVA at 8.04p a day for 31 days, about £37, on top of its normal capacity charge.

Your network operator can act. Under the National Terms of Connection, the standard terms that apply unless your site has a separate connection agreement, your network operator can send you a notice after each breach. You must then bring your import back within your MIC and, within 30 working days, propose a new MIC or explain why not. If that doesn't resolve it, the operator can propose a new MIC and, if you don't accept it, fit equipment to limit your import, which you may have to pay for. The terms also allow it to cut off (de-energise) the supply to a site that breaches them. Ofgem has said that a customer over-using its capacity could compromise the operation of the network by overloading it.

Can you reduce your agreed capacity?

Yes. If your MIC is higher than you need, you can ask your network operator to lower it, and your capacity charge falls from the next month or billing period. The network operators set similar rules. These are the published rules for the regional network operators other than Northern Powergrid (for North East England and Yorkshire, ask Northern Powergrid):

The charging statements we checked, and the National Terms of Connection, also say a reduction usually can't take effect within 12 months of your MIC last being agreed.

Before you reduce, weigh up the risks:

• You might not get it back. National Grid Electricity Distribution says capacity you give up is released back into the network and may be used by others. The charging statements say getting your original capacity back may mean network reinforcement and charges.
• Any half hour over the new MIC brings an exceeded capacity charge for that whole billing period.
• You can usually only reduce it once in 12 months, and getting capacity back depends on what's available, so allow for busy periods and any plans to grow.

Your network operator can also suggest a lower MIC if your import never goes above 75% of it over 12 months in a row, but the change doesn't take effect unless you agree to it or it's formally determined under the terms.

Does a lower capacity reduce your other fixed charges?

Usually not. For most sites with agreed capacity, the band for the fixed part of the distribution charges from April 2026 was set from the site's average MIC between 1 May 2022 and 30 April 2024. Under an Ofgem decision called DCP389, a site only moves band after a change of use or site layout that shows up as a change of more than 50% in its MIC or use.

So lowering your MIC cuts your capacity charge, but on its own it may not move you into a lower band. Our guide to TNUoS charges shows the transmission fixed charges by kVA band.

Ofgem is also consulting on DCP412, a proposal to move sites into a lower band if they use at least 90% of their agreed capacity in at least one half hour but little electricity overall. It's minded to reject it, and aims to decide before 20 January 2027.

Increasing your agreed capacity

If your business needs more power, you apply to your network operator, usually with a form and details of your site and equipment. An increase depends on capacity being available, and it may need reinforcement work on the network.

Since 1 April 2023, the connection charging rules, which National Grid Electricity Distribution says also apply to increases, no longer make demand customers pay towards reinforcing the wider network. If the reinforcement would cost more than a threshold of £1,720 per kVA, you pay the part above it. You still pay for the work on your own connection. UK Power Networks says it can't give an exact price or time frames online, because each project is unique. Ofgem's guaranteed standards do set times for a quotation, with compensation if the network operator misses them: 25 working days for a larger low-voltage demand connection, such as a CT-metered supply, 35 for high voltage and 65 for extra high voltage. Smaller whole-current supplies have shorter times, of 5 or 15 working days.

Once an increase is agreed, your operator issues a new connection agreement.

How to check whether your capacity is right

1. Find your MIC. It's in your connection agreement, and some half-hourly bills show it with your maximum demand in kVA.
2. Get 12 months of half-hourly data from your supplier or data service, so busy and quiet seasons are both included. Our guide to smart meters for business explains the data your meter records.
3. Find your highest half hour in kVA over the year and compare it with your MIC. Working out kVA needs your reactive (kVArh) readings as well as kWh, so if your data only shows kWh, ask your supplier for your maximum demand in kVA.
4. Allow some headroom. SP Electricity North West recommends setting your MIC 10% above the peak reached in the last 12 months. National Grid Electricity Distribution advises signing up only for capacity you realistically need, and notes that not all your equipment runs at full power at the same time.
5. Think about the future. If you plan to add equipment, such as electric vehicle chargers or new machinery, a lower MIC now could mean paying for an increase later.

If your MIC is well above your highest demand, contact your network operator. Your supplier then updates your bill: National Grid Electricity Distribution and UK Power Networks both say this is the supplier's job, and UK Power Networks says it can take time to show.