The government has introduced a support scheme that helps the UK’s Energy Intensive Industries compete with companies in countries with lower energy costs. However, this will slightly push up the electricity prices for all other businesses. Read on to find out what it means for your business and what to do next.
Currently EIIs can claim a possible exemption of up to 85% of the Contracts for Difference (CfD) cost (from 3 November 2017) and the Renewables Obligation (RO) cost (from 1 April 2018).
Feed-in Tariff (FIT) exemptions are also being considered, however state aid approval is still required. The Government has been in discussion with the European Commission for approval of the state aid case for this exemption – already received for the other two exemptions. However, it looks unlikely anything will happen before April 2019 at the earliest.
A new Government consultation is proposing to widen eligibility for the CfD, RO and possibly the FIT exemption schemes. The proposed changes would mean more British businesses benefitting from cheaper energy – potentially lowering the qualifying threshold from 20% to as low as 10% energy intensity.
Most businesses won’t qualify for any exemption and the cost of this scheme will effectively be paid for by all non EII exempt electricity users across the UK.
The Department for Business, Energy and Industrial Strategy (BEIS) is currently consulting on widening eligibility for the CfD, RO and possibly the FIT exemption schemes.
As with the current scheme, all other customers would have to support this through an increase to their costs. This could be as soon as 1st April 2019 for CfD and 1st April 2020 for RO. The inclusion of FIT in the exemption scheme is still to be confirmed, and if approved, the new reduced eligibility threshold would apply.
Depending on your contract, the revised RO level for 2018/19 could mean an increase in the costs that you pay. We already include this extra charge in all new Fixed + Peace of Mind quotes. So our prices reflect the EII scheme as it’s currently designed and considers future changes as part of the current consultation.
So if you’re looking at a contract, 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.
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.
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.