Energy: don’t get caught out

Posted on 19 Apr 2015 by The Manufacturer

Energy policy is constantly evolving, so it is easy for manufacturers to be caught on the back foot, warns Anthony Ainsworth, B2B and marketing director for E.ON.

Anthony Ainsworth, B2B & marketing director, E.ON.
Anthony Ainsworth, B2B & marketing director, E.ON.

For businesses without an energy expert on the books, the multitude of acronyms and dense technical language, can make navigating the energy policy landscape a challenge at best and a minefield at worst.

Changes in policy and regulation often have a direct, and legally-binding, impact on your business’ operations, so it is vital to stay on top of developments so you have plenty of time to make sure your business is compliant.

E.ON wants to help businesses manage their energy use and navigate policy changes effectively, so we’ve digested some of the key updates and changes of the past three months, pulling out the main policies and regulations that might impact your business, whether you’re a family-run construction company or a national automotive corporation:

Non-energy costs and state help for energy intensive industries

The Government brought forward Feed-in Tariff (FiT) compensation for energy intensive companies in the recent Budget. Last year’s Budget announced a package of reforms to reduce energy costs faced by the most energy intensive manufacturers.

Included in this was compensation for indirect costs associated with small-scale FiTs and the Renewables Obligation from 2016-17. In the 2015 Budget, the Government announced it would bring forward the FiTs component of the compensation to the earliest point at which State Aid approval from the EU was received in 2015-16.

Sheffield Forgemasters 2
Last year’s Budget announced a package of reforms to reduce energy costs faced by the most energy intensive manufacturers.

The Government has estimated this will save energy intensive industries a further £25m through the coming financial year.

If you’re looking to control energy costs, or need guidance on whether your business is eligible for help with indirect energy costs such as FiTs, your account manager should be able to provide you with more details on how they can help

Be aware of the phasing out of aggregated gas supplies

If your business has several separately metered premises in close proximity you may well have aggregated gas supplies. This is when two or more meter points (specifically the Meter Point References or MPRs) are joined together to form one supply point.

Previously, when businesses had two or more premises together this had been allowed. However, under the Gas Transporters’ new Modification 428, since April 2014 no new aggregations have been permitted and all existing aggregations will need to be split by the end of June 2015 so each meter point or site is charged separately.

This is a mandatory change that will impact all energy suppliers and customers with an aggregated supply. Your energy supplier should let you know once they’ve started this process, but do check with them if you’re unsure.

E.ON’s relationship with bodies such as Ofgem and DECC gives them a significant opportunity, to help these both manufacturers and non-manufacturers to be heard.
For E.ON customers, once Modification 428 comes into place your bill may look different.

For E.ON customers, once the changes are in place your bill may look different because your accounts may be set up, charged and priced individually.

Make sure any properties you rent – or rent out – comply with new energy efficiency regulations

Commercial properties in England and Wales rated F or G on their Energy Performance Certificates (EPC) can no longer be let until their energy efficiency improves to at least an E rating.

The EPC indicates the energy efficiency of the building fabric and the heating, ventilation, cooling and lighting systems. The regulations cover the non-domestic private rented sector as well as the domestic, but exclude short tenancies of six months or less.

These new laws come into effect from April 2018 for new tenants. Existing lets can continue to be let beyond 2018 without any change, but properties will need to be upgraded before any new tenancy begins after this date. From 2020 (domestic) and 2023 (non-domestic), the rules will apply to all privately rented properties.

If you own any premises and have concerns that the buildings you rent out might not meet these energy efficiency requirements, check out these tips on making improvements to your premises to stop it leaking energy.

Injection moulding machines in a large factory - image courtesy of DFC
There is advice available if you own premises and have concerns the buildings may not meet energy efficiency requirements.

E.ON’s SME business customers can also consult the Energy Toolkit on E.ON’s website, which offers a free energy efficiency advice line for customers. High-energy usage customers can access a pay-to-use data monitoring package and there are a number of business streams that can help manage business buildings once occupied.

Make the most of your chance to shape regulations

When making decisions affecting your energy supply, you may well use a third-party intermediary such as an energy broker for advice or information. Back in February 2014, Ofgem proposed a new voluntary code of practice for energy brokers and other third party intermediaries to be clear with businesses about their fees and the suppliers they represent.

Following industry input, Ofgem has been drafting new code and licence conditions and a statutory consultation is expected to begin at the start of Q2 2015. This gives you the opportunity to shape the regulations, so keep an eye out in the next month or so.