Three changes that might hit your business energy bill this April
April has brought some changes that could mean you see an increase in your business energy bill this month. As well having their immediate impact, these increases should also be a wake-up call to start thinking ahead when it comes to energy if you're a business owner or decision maker.
So what has changed? Three things:
1. CRC Energy Efficiency Scheme
The CRC Energy Efficiency Scheme (previously known as the Carbon Reduction Commitment), is a government scheme to improve energy efficiency and reduce the amount of carbon dioxide emitted by large public and private sector organisations. If your business comes under the scheme, then this month you need to buy an allowance to cover your forecasted carbon emissions for 2011/2012 - at a rate of £12 per tonne of carbon.
You should also be aware that there are new proposals from DECC to simplify the scheme, particularly focussing on cutting the adminstrative cost for businesses. Businesses are free to comment on these proposals - a formal consultation is running for 12 weeks from 27 March 2012. The government will then amend the legislation by April 2013.
2. Climate Change levy (CCL)
The Climate Change Levy (CCL) is a tax which all businesses (bar a few exceptions) pay on each unit of energy they use.
On 1st April 2012, CCL went up: the rate for electricity rose from 0.485 pence per kilowatt hour (kWh) to 0.509 pence per kWh; the rate for natural gas rose from 0.169 pence per kWh to 0.177 pence per kWh. For a typical business using 25,000 kWh of electricity and 5,000 kWh of gas a year, this will add an additional £6.40 to the annual bill and take the actual cost of this levy to £136.10 a year.
3. Gas transportation charges
All energy suppliers have to pay transportation charges to cover the cost of providing and maintaining the pipes that carry gas to customers. These charges make up about 15% of your energy bill.
LDZ gas transportation charges went up on 1st April 2012: the average change for East of England was 3.6%, for London 7.1%, for the North West 7.4%, and for the West Midlands 4.3%. Directly or indirectly, these increases will be passed onto businesses.
These three possible price increases are just a snapshot of the wider landscape when it comes to business energy.
There are numerous schemes, changes, charges, levies and costs which will have an impact on your bill, and that's leaving rising wholeale energy prices aside. It’s not enough to just choose an energy supplier then sit back and ignre your bills - businesses need to be proactive in every area and make sure that they're doing everything possible to offset these costs, both now and in the furure.
Of course I'd say this, but one way of doing it is by getting the most competitive tariff you can. For an average customer, the least competitive unit rates on the market were around 70% higher than the cheapest rates available last year. As a result, switching to a new tariff and/or supplier can make a huge difference to your bills and, most importantly, your bottom line. Give us a call on 0800 688 8568 to find out more.
For more information on the Climate Change Levy visit our partner company Business Juice.
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