What the changes mean for your budget and energy emissions reporting.
As an energy manager, you know this problem all too well:
Changing costs makes budgeting hard, yet accurate budgeting underpins your credibility.
So when there’s a change coming to one of the costs that makes up your bill, we’ll break it down to make easier for you to deal with.
This year two environmental charges that businesses and public sector bodies pay are changing significantly:
Watch this video for quick overview. Steve Spittle, Account Manager for EDF Energy steps you through the key changes and what they will mean for your budget. There’s more detail below on how to deal with it.
A recap: what’s changing?
From March 2019, the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) will close. But that’s not the end of the story. The Government aims to streamline the taxes and duties it uses to incentivise organisations to reduce their energy consumption and carbon emissions. So to replace CRC they’re making 2 key changes:
How does this affect your budget?
In short, CRC participants are likely to come out with an overall saving - as the increase to CCL is less than the CRC charge per kWh.
Most other CCL-paying organisations are likely to see an increase in their overall costs. But bear in mind - whilst the 45% year-on-year increase in the CCL rate might sound huge, CCL is still a small charge on your bill so the effect on your budget will only be around 2-3% percent overall.
In case you're wondering - the CCL rate from 1 April 2018 for electricity was 0.583 pence per kWh. From 1 April 2019 it's going to be 0.847 pence per kWh (you'll see this with extra 0s in £'s per kWh on your bill).
It’s worth remembering that a few organisations are exempt from paying CCL or qualify for reduced rates. Check out the HMRC guidance on VAT and CCL to see if you might qualify, and how to apply.
So, what does this mean for your energy and carbon emissions reporting?
As Steve touched on in the video, the closing of the CRC scheme is part of the Government’s plan to update which organisations need to report, and how they need to report. This is different for private and public sector organisations, so we’ve broken these down for you below.
Public Sector -
Private Sector -
Keep reading below
Here are the two key updates
1. CRC participants will report under the scheme for the last time in 2019
If you are one of the 4000 or so participants in CRC, you will report under the scheme for the last time by the end of July 2019. Be sure to ask for any EDF Energy reports by the end of March so you have everything you need in good time. You can still request it up until the end of October 2019.
You will then surrender your allowances for emissions from energy supplied in the 2018-19 compliance year by the end of October 2019. And then you’re done with CRC!
However, it’s being replaced by a new scheme that could be much less time consuming, but affects more businesses.
2. Most listed companies and large unlisted businesses will report under the new scheme
Under the new Streamlined Energy Carbon Reporting, or SECR for short, nearly 12,000 businesses will now be obliged to report their carbon emission and energy efficiency actions, from April 2019.
Large unlisted businesses should get ready to report
For the first time this obligation to report now extends to all unlisted, UK registered companies and LLPs that are considered “large” under the Companies Act. And that essentially means your company meets at least two of the following criteria:
- It has at least 250 employees
- It has a turnover of more than £36m
- It has an annual balance sheet total of £18m
What will you need to do?
You will be called on to share your energy usage, energy emissions, and energy efficiency improvements in your annual director’s report. It will be published by Companies House and made available to the public to access to encourage businesses to share their progress.
When you’re getting ready to write your report, just ask us for your energy consumption report. It’s best to allow at least 4 weeks to be sure you get it in time.
A few organisations are exempt
Your business is exempt if you use less than 40,000 kWh in the year of reporting, or if your business is not registered in the UK.
SECR does not apply to charities or public sector organisations. If you’re in the public sector, check out this blog to see what the change means for you.