GEM ENERGY - For Business Group
Creating A Favourable Variation For Business Energy Consumers
ENERGY INTENSIVE INDUSTRIES EXEMPT SCHEME - (EIIS)
UK - GOVERNMENT FUNDED SCHEME
Please refer to government web site below -
ENERGY INTENSIVE INDUSTRIES EXEMPT SCHEME ENTITLES, UK COMPANIES, OF UP TO AN 85% EXEMPT ON CHARGES WITHIN YOUR CURRENT ENERGY TARIFF ON ANY RENEWABLE OBLIGATION, CONTRACTS WITH A DIFFERENCE AND FEED IN TARIFF CHARGES.
GEM ENERGY - For Business can take care of the full application process on behalf of prospective clients free of charge, please find application process below.
PLEASE READ ON FOR FUTURE GOVERNMENT PROPOSALS, THE ENERGY INTENSIVE INDUSTRIES COMPENSATION SCHEME.
Now all covered under an exemption scheme rather than a compensation scheme, for the costs of Renewable Obligation, contracts for difference and Feed in Tariff for energy intensive industries.
What is the problem under consideration? Why is government intervention necessary?
The Renewables Obligation (RO) and Feed In Tariff (FIT) are two of the policies that Government has put in place to incentivise the investment in low-carbon electricity generation. The costs of these schemes are borne by electricity bill payers.
For energy intensive industries (EIIs), this can undermine competitiveness as businesses in other countries may not be subject to similar energy and climate change policy costs. The Government is seeking to lessen the cost disadvantage faced by EIIs as a result of energy and climate change policy costs relative to their EU and international competitors.
What are the policy objectives and the intended effects?
The objective of the policy is twofold. Firstly, to continue supporting energy intensive industries in order to maintain competitiveness for these industries by reducing the costs of the RO and FITs schemes.
Secondly, to increase the effectiveness of this support. Making the proposed amendments to legislation to deliver an exemption from a proportion of the costs of the RO and FITs schemes provides increased certainty and real time support which in turn lowers production costs and maintains competitiveness of EIIs.
It is intended that the compensation scheme for 2016/17 will move to an exemption scheme in 2017/18.
What policy options have been considered, including any alternatives to regulation?
The policy seeks to ensure that the competitiveness of energy intensive industries is not undermined by higher electricity costs, compared with European and international competitors. Non-regulatory or non-spending options would not address this distortion sufficiently. The policy options considered are as follows:
Do nothing: Continue with supporting energy intensive industries with a compensation scheme. Option 1: Move from compensation to implementing an exemption scheme through amendments to legislation.
This provides an exemption from indirect costs of RO, CFD and FIT schemes, against up to 85% of electricity used by (1) businesses which pass a sector level and business level test, and (2) businesses which are direct competitors of the first group of businesses.
Description and scale of key financial costs by main affected groups - SME BUSINESSES AND DOMESTIC DWELLINGS
An exemption provided to industry will narrow the base of consumption from which total RO and FIT support costs are recovered, and therefore increase electricity costs for non-exempt households and businesses. The average total value of the exemption is £390m per annum for EIIs. Our estimate of the average annual impact on electricity bills to households and exempt businesses is set out in the table below. There will also be one-off and ongoing administrative costs for Ofgem and energy suppliers.
Other key non-financial costs by ‘main affected groups
Our analysis suggests that there will be a very small increase in the number of fuel poor households. For non-exempt businesses, which will experience an increase in their electricity costs, there may be an impact on their decisions on employment, output and investment. For some energy suppliers, there may also be an impact on their competitiveness.
Estimated increase on average bills by affected group in Great Britain, over 2017, this will increase even higher year on year if Energy Intensive Industries Compensation Scheme goes from compensation to full exemption
Average impact across all households
Small business energy user
Medium-sized energy user
Large sized energy user
CONTACT - GEM ENERGY - For Business - to discuss the energy intensive industries compensation scheme or if you are an effected, exempt SME or large business, ON - 01207 664 311, email us at [email protected]. or fill in our contact form below, making sure all of your details are correct.
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