Energy Intensive Industry (EII)

by 06 June 2018

The electricity that you use only makes up around 40% of the total cost on your invoices. The rest is to cover costs from third parties such as the distribution and transmission network to get the electricity to you when you need it and environmental charges such as (RO, CFD and FIT) These charges are to help build a more sustainable future.

These charges are based on the energy that you use and are non-negotiable as are passed on through suppliers.

The EII legislation was introduced to help energy intensive industries such as sectors in steel, mining and engineering compete in the global market by offering them a reduction in their FIT, RO and CFD if they fit a certain criteria. This reduction was up to 85% saving the industry on a whole around £100 million a year.

This means non EII’s are having to pay the extra to make up the difference in the charges:-

The Renewable Obligation (RO)
RO supports large-scale renewable electricity generation
in the UK and requires all licensed electricity suppliers
like us, to source an increasing amount of electricity from
renewable sources.

From 1 April 2018 EII’s will be exempt from up to 85%
of the costs of this scheme and non EII’s will make up the difference.

Contracts for Difference (CFD)
This scheme has replaced the RO for new entrants
investing in low carbon generation.
Low carbon generators through auction can guarantee
themselves a fixed price for the electricity they produce.

The legislation exempting EII’s from this third party cost
was approved in 1 November 2017.
This means that from 1 November 2017 non EII’s are
having to pay extra to make up the difference.

The Feed-in Tariff (FIT)
The Government introduced this to
encourage homes and businesses to
generate their own renewable, low
carbon electricity.

We’re still waiting to hear whether EII’s
will be given an exemption for the FiT.
But the department for Business,
Energy and Industrial Strategy have
told us that no exemption will be
applied before 1 April 2019.

Please be aware if your supplier did not build this cost into your energy contract you could be facing a pass through on your bills. Utility Team is working closely with suppliers to understand what each supplier is doing with current contracts and ensuring that the cost is built into forward contracts.

Please call us today, one of our specialists will check your current contract and advise if you will see any pass through charges on your invoices.

Call us on 02476 997901 or email info@utilityteam.co.uk.