Energy Intensive Industry (EII) exemption – Frequently Asked Questions
What is the Energy Intensive Industry (EII) exemption?
To ensure the UK meets its low carbon targets, the Government has introduced several policies that are driving renewable growth. However, they’ve also increased the cost of electricity and made UK prices higher than in other countries.
To help Energy Intensive Industries (EIIs) in the UK compete with their EU counterparts, the Government suggested they should be exempt from some Third Party Charges (TPCs). The cost of the exemption would be paid for through an increase in costs for non-EII businesses.
The Government proposed that EIIs should be exempt from the costs of the Renewable Obligations (RO) scheme, the Contracts for Difference (CfD) scheme and the Feed in Tariff (FiT) scheme.
What are EIIs?
Energy Intensive Industries include sectors such as the steel, chemicals, engineering and brick making industries, in which energy usage makes up a significant part of production costs.
Please visit the GOV.UK website to access a list of designated EIIs and the qualification rules
How will EIIs benefit from the exemptions?
The Department of Business, Energy and Industrial Strategy (BEIS) expects the measures to benefit over 130 heavy users, saving them around £100m a year in energy costs. The total energy exempt volume will be around 10TWh per annum.
What are Third Party Costs (TPCs)?
TPCs are the non-energy elements of your bill that relate to: running the electricity network efficiently; paying organisations involved in its running; government policies; and incentivising renewables.
When will the new rates come into effect?
The department for Business, Energy and Industrial Strategy (BEIS) has now published its revised RO level for 2018-19, confirming that the exemption to some costs for EII customers will start from 1 April 2018. The full announcement can be accessed on the BEIS website.
What does the EII exemption mean for my business?
Under the terms of your contract, we reserve the right to pass through these legislative charges. Whilst Hudson Energy does all that it can to absorb unforeseen changes in energy costs, in this instance we have no option but to continue to pass on these costs to you if you are a non-EII customer.
What will show on my bill?
If the charges are applicable to your business, they will be added into your unit rate from 1st April 2018.
What if my business is a microbusiness?
The EII charges will not apply if you are a microbusiness. Please visit the Ofgem website to understand if you are a microbusiness by clicking here.
Where can I find more information on EII Exemption?
For more information, please visit the GOV.UK website.