Why Businesses Should Keep On Top of Energy Compliance and Legislation
In today’s ever-changing landscape of energy compliance, knowing which regulations apply to your business can be complex, but staying on top of your obligations can help you avoid fines and reputational damage.
The truth is that energy compliance and legislation are important. To get the UK to where it needs to be by 2050 requires the right policies and processes in place, including energy infrastructure that is fit for purpose. And to do that, new regulations are introduced which some or all businesses are affected by. That’s why staying on top of the latest levies and schemes can help businesses in the following ways:
Don’t Miss Opportunities
Businesses that don’t keep up to date with changing legislation could be unaware of the savings opportunities that come from certain policies and regulations. For example, some energy intensive businesses have the opportunity to receive relief from certain levies if they agree to carbon reduction targets. And depending on your business, this relief could be worth hundreds of thousands of pounds, or even millions.
While some schemes may not apply to all businesses across all industries, keeping on top of them and fulfilling mandatory requirements allows a business to reduce its consumption, as well as its energy bills. Something that could be very beneficial given the current market volatility.
With the different energy levies and schemes in place, it can sometimes prove difficult to stay on top of all the obligations. But not having an understanding of energy policy can lead to hefty fines for a business’s non-compliance. This is an expensive mistake to make and, depending on what a business hasn’t complied with, can lead to fines of up to £50,000 for one instance.
Manage the Impact on Finances
Not having an awareness of changes to levies can leave a business vulnerable financially. The last thing a finance director wants is a shock when the next energy invoice arrives and there’s an additional charge that hasn’t been factored into the budget. That’s why staying ahead is important in order to accurately budget for the financial impact of any relevant scheme and manage current and future finances.
Real Life Example
As an energy consultancy, we keep track of changing energy legislation and how it will affect our clients. One example was the introduction of the Targeted Charging Review (TCR). To determine the impact TCR would have on our clients, we used data and analytics to create a model that shows the effects. We then use this to inform our clients of their options.
One such client, a manufacturer of high-quality engineering cast components, has two meters installed on one site. The meters used the full KVA capacity, and under TCR, the manufacturer fell into the top band for Distribution and Transmission charges for both meters.
Because these meters are classified as separate, they would be charged twice for the BSUoS and DUoS charges under TCR. This would then be increased when TNUoS charges are implemented in April 2023. The change in energy regulation was going to cost the manufacturer hundreds of thousands of pounds each year. But there was something we could do to drastically change this outcome.
So, after talking to the manufacturer and getting approval, we took advantage of our strong supplier relationships and approached the distribution company to request that they reclassify the two meters to aggregated meters. This means they would be considered one meter, and would only be charged once.
The distributor agreed and the meters were reclassified with zero disruption to the manufacturer. The overall process took two months, over April and May, when the charges started to be applied. To avoid them being charged twice, we were able to get the distributor to agree that the manufacturer would get reimbursed for April and May’s charges.
From this, the manufacturer has made significant savings from meter aggregation as a result of Businesswise Solutions staying on top of energy legislation, our analytical capabilities, and network relationships. From April 2022, the manufacturer is saving £99,509 per year and from April 2023, when TNUoS charges are transferred under the TCR, they will save £169,757 per year. A great result!
So there you have it. Keeping track of energy compliance and legislation is important, no business wants to miss opportunities or get caught with an additional charge or fine. Don’t get left behind, if you need support speak to one of our experts today.
Author: Robyn Miller, Marketing Manager
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