9th JULY 2015
CCL EXEMPTION REMOVED IN SUMMER BUDGET • Data Management • Legislation • Compliance
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A Unique Perspective | CCL Exemption | 09.07.2015
Industrial consumers using renewable energy will no longer be exempt from the Climate Change Levy (CCL) under reforms introduced by Chancellor George Osborne in the summer budget. Osborne said that the “outdated” CCL exemption for renewable electricity would be removed now that a long-term investment framework for renewable energy was in place.
Industrial consumers using renewable energy will no longer be exempt from the Climate Change Levy (CCL)
Some industrial consumers benefitted from this CCL exemption through the supply of renewable electricity with some sources overseas also eligible in addition to that in the UK. This change will take effect from 1 August, although there will be a transitional period for suppliers after this date to claim the CCL exemption on renewable generation before then. Discussions are expected on this during the summer and autumn in order to determine an appropriate timeframe.
Impact on Consumers Industrial users without a climate change agreement that receive this exemption
Discussions are expected on this during the summer and autumn in order to determine an appropriate timeframe
will be affected the hardest, and could see up to a £5.50/MWh increase in electricity bills, depending on the scale of their exemption. From 1 August electricity generated from renewable sources will no longer be eligible for the CCL exemption for renewable electricity when supplied under a renewable source contract. This is likely to mean that Levy Exemption Certificates (LECs) will no longer be issued to generators and redeemed by suppliers as proof that renewable electricity has been supplied under a renewable source contract. Suppliers will be able to continue to make CCL exempt supplies under either existing or new renewable source contracts until the transitional arrangements end or their LEC credit balance is used up, whichever is sooner. In the short term suppliers will be considering their positions and some have already indicated that
From 1 August electricity generated from renewable sources will no longer be eligible for the CCL exemption for renewable electricity
contractual terms for such renewable electricity contracts are being reviewed until the position becomes clearer.
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A Unique Perspective | CCL Exemption | 09.07.2015
Business energy efficiency tax regime under review The government will also review the business energy efficiency tax landscape and consider approaches to simplify and improve the effectiveness of the regime. The review will consider the CCL, carbon reduction commitment energy efficiency scheme and their interaction with other business energy efficiency policies and regulations. A consultation is expected in the autumn.
The government will also review the business energy efficiency tax landscape and consider approaches to simplify and improve the effectiveness of the regime
Other Budget Measures In order to help reduce energy costs, the government will extend competitive tendering to onshore electricity transmission assets, which is estimated could save consumers around £390 million over the next 10 years. The government welcomed the provisional findings of the Competition and Markets Authority’s energy market investigation. It said it is important that as many consumers as possible are on the best available deal, in order to save money on their energy bill. The government aims to introduce 24-hour switching by the
The government welcomed the provisional findings of the Competition and Markets Authority’s energy market investigation
end of 2018 and will also act to improve trust in the switching process. On gas, the North Sea investment and cluster area allowances will be expanded to include additional activities, which will maximise economic recovery, aimed at reviving oil and gas production in the mature North Sea basin. While no new proposals were made on shale gas, the government confirmed its support for making the most of the UK’s oil and gas resources, including the safe extraction of shale gas. On the wider topic of climate change, the government said it will push for a global
On gas, the North Sea investment and cluster area allowances will be expanded to include additional activities
climate deal later this year, which keeps the goal of limiting global warming to 2°C firmly within reach.
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