By Iain Walker, Head of SME, E.ON
CMA, CCL, RO, P272 – the minefield of political and industry acronyms can be enough to confuse even the most diligent energy enthusiast. Yet changes in policy and regulation often have a direct or legally-binding impact on your business – be it immediately or in the future. With the General Election out the way and a new Government making its mark, there have been a number of developments in energy policy that you may need to be aware of.
E.ON wants to help businesses manage their energy usage and navigate policy changes effectively, so we have digested some of the key updates and changes from the last three months. From energy tax reviews announced in the recent Budget to new rules for businesses on Maximum Demand advanced meters, we have pulled out the main policies and regulations that may impact your business, whether you’re a local shop or a manufacturer with factories across the country.
1) Understand your tariff
The Competition and Markets Authority has issued provisional findings and possible remedies as part of its investigation of the energy market. The CMA states that while an increasing number of small businesses do engage in choosing their energy contracts, a sizeable minority appear to be on tariffs that they have not actively negotiated. The CMA is also concerned that there is a lack of transparency of tariffs available, that brokers or third party intermediaries (TPIs) might not be trusted and therefore that the market is not functioning as well as it might. The CMA has outlined a series of remedies it is considering in this area to address these issues and will now seek to consult with interested parties to develop these ahead of publishing its final report at the end of the year. It is worth making sure you completely understand your tariff and all options available to you – including what is included in any fixed price agreements and timings for your contract renewals.
2) George Osborne’s energy tax review
Chancellor George Osborne announced a review of the business energy tax landscape – including the Climate Change Levy (CCL) and the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme – which will consider approaches to simplify and improve the effectiveness of these schemes regime and their interaction with other energy efficiency policies and regulations. The Chancellor said a consultation would be launched in the autumn of this year with a view to creating a “fair and more efficient energy environment for business that minimises administrative burdens and improves incentives for business to invest and grow”. It is worth keeping track of the outcomes of this review, should there be any changes that affect what you pay as a business.
3) Check if your business will be moved on to half-hourly metering and settlement
New rules are coming into effect for customers with Maximum Demand advanced meters, also known as profile class 5-8 meters. Ofgem has approved a number of changes which mean suppliers will need to settle these meters on a half hourly basis, via a change to their Automated Meter Reading (AMR) meters. Supplies under 100kVA tend to be Non Half-Hourly metered, using meters that feature AMR technology or meters that are read manually. The move should provide a more accurate picture of energy use. Suppliers will also be able to share more detailed data with customers, enabling them to get a clear sense of how much energy they use, and when. The move over to the new regime will begin in November, with Ofgem requiring the system to be fully in place by 1 April 2017. More information about P272, whether your business is affected and what needs to happen next is available on the E.ON website.
4) New MPs of note
The Conservative MP for Broxtowe, Anna Soubry, has been appointed Minister of State for Small Business and Enterprise at the Department for Business, Innovation and Skills (BIS). Formerly a junior minister for defence, Soubry has been a Member of Parliament since 2010. It has been announced she is to attend Cabinet meetings along with her Secretary of State, Sajid Javid MP. Soubry’s official responsibilities include a number of areas important to businesses of all sizes, including business sectors and advanced manufacturing, competitiveness and economic growth, access to finance and better regulation.
Labour MP Iain Wright has been elected by his fellow members to chair the House of Commons Business, Innovation and Skills Select Committee. Wright, who represents Hartlepool and was Labour’s Shadow Industry Minister in the last Parliament, will head the panel of MPs which looks at the work of the Department for Business, as well as issues such as business competitiveness and trade promotion. Elsewhere SNP MP Angus MacNeil has been elected as the Chair of the Energy and Climate Change Select Committee, which scrutinises the work of the Department for Energy and Climate Change and related issues. These MPs will be key in any scrutiny of policies that could affect your business.
Things to look out for in coming months:
• July - September – Warmest time of the year – businesses less likely to be relying on heating, but may use more electricity through air conditioning and fans
• July – Independent Retailer Month, celebrating small businesses including customers of E.ON
• 31 August – Summer Bank Holiday
• October – National Minimum Wage rates expected to be updated
• Autumn Q3 – consultation on the business energy efficiency tax landscape