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

The government is working on changes to 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!

Currently the exemption for these costs is paid out as a rebate directly from the government, so you need to register with the Department of Business, Energy and Industrial Strategy (BEIS).

Changes to the scheme

The government had planned to change this scheme in April 2017 meaning that an exemption would be applied to the costs suppliers pay, with suppliers expected to pass the reduced amount to EIIs. As announced by Department of Business, Energy and Industrial Strategy (BEIS), Energy Intensive Industry exemptions have been pushed back because the legislation wasn’t completed on time.  

The latest update:

For  Contract for Difference (CfD) exemptions, Parliament is in the process of debating the Electricity Supplier Obligations (Amendment and Excluded Electricity), which would enable the CfD exemption to start, so we expect this exemption will start shortly.

The Renewable Obligation (RO) Exemption is still awaiting legislation to be laid before parliament meaning that the implementation date isn’t yet known. This means the earliest start date we could see for this exemption would be March 2018. The government has set a four-month lead in time which would mean if they publish before the end of November the exemption will start in March.  After that the exemption will have to wait until the 2018/19 compliance year. Given everything else that is going on in the political space it is difficult to know how soon this will all happen.

FiT Exemptions are even less certain with state aid approval still required. 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, there is no sign of that happening anytime soon, and the fact that Government has yet to decide what happens to the FIT scheme after 2019 (when the current FiT Tariffs end) may even be holding up proceedings.

For all other businesses

Most businesses won’t qualify for any rebate and the cost of this scheme will effectively be paid for by all non EII exempt electricity users across the UK rather than by the government.

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.

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. 

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.

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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