Energy Intensive Industries (EII) exemption – what it means for all businesses

From April 2017 the government is looking to change a support scheme that helps the UK’s energy intensive industries compete with companies in countries with lower energy costs. But this will push up electricity prices a little for all other businesses. Read on to find out what it means for your business and what to do next. 

For EII businesses

The exemption is worth up to 85% of the Renewables Obligation and Feed in Tariff. Based on our latest forecasts for 2017/18 costs, that works out to somewhere between £20.23 and £21.51 per MWh. So a qualifying business using 10GWh of electricity a year could save up to £215,000. Worth going for!

This year the exemption is paid out as a rebate directly from the government, so you need to register with the Department of Business, Innovation and Skills (BIS).

The government proposes to apply the exemption via electricity suppliers from April 2017. So a rebate could be applied directly to your electricity bill, but you’ll still need to be registered with BIS. 

Working out if you qualify

Energy Intensive Industries include sectors such as the steel, chemicals, engineering and brick making industries where energy usage makes up a significant part of production costs.

Here is the government’s list of designated EIIs and the qualification rules. (GOV.UK website)

To complete your application you’ll need to prove your average electricity spend over your last three financial years also meets the scheme’s criteria . You can access your EDF Energy bills in MyAccount.

Don’t delay. Rebates are paid from the month you register and aren’t backdated.

For all other businesses

Most businesses won’t qualify for any rebate but this change will affect their prices too from April 2017 when the exemption to costs will be applied through energy suppliers and the rebate will effectively be paid for by all non EII exempt electricity users across the UK rather than by the government.

We estimate this will add around 1.5% to your costs – roughly £1,500 for every 1 GWh your business uses – to cover the 20 TWh of electricity included in the EII exemption scheme. 

If you’re on a fixed price contract with EDF Energy, don’t worry. We’ve done the numbers and have the EII cost associated with the proposed exemption scheme covered in your existing price. This is a new cost but we stand by our “It’s fixed” commitment.

But it’s buyer beware for your next contract.

We already include this extra charge in all new Fixed + Peace of Mind and Fixed + Protect quotes. So our prices reflect the EII scheme as it’s currently designed.

We’re not sure all other suppliers do yet.

So if you’re looking for a contract that runs after April 2017, remember to check that each offer includes the EII cost. Now more than ever, a price that looks too good to be true probably is. 

Stay up to date on future energy costs.

The EII exemption is the latest change to the costs behind your electricity price, but it won’t be the last. There’s an easy way to stay abreast of changes to the key cost components in your electricity price.

Read our forecasts in the Monitor report published quarterly in our Market Insight portal. You have free access as an EDF Energy customer. 

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