LSI has answered some of our frequently asked questions to help you understand the comlex energy market. Call our friendly team on 01727 877 020 or request a call back.
What is Green Energy?
Green Energy is the general term for electricity that has been generated in a sustainable way. In the future it might be possible to buy sustainably produced gas or heat. Green Energy can be produced by various renewable energy sources, such as wind, solar and hydropower.
What does Green Energy Cost?
Most suppliers charge an additional amount per kilowatt-hour on green energy as opposed to brown energy (regular energy). However, customers will not pay climate change levy on green energy and at best it can prove to be a cost-neutral exercise, i.e. refund of CCL equals cost of green premium on unit price.
Do I need a special connection for Green Energy?
No, the electricity from your wall plug remains the same as the origin of electricity cannot be detected. However, your supplier will guarantee that electricity you buy has been produced from renewable energy sources.
What is ROC?
Under the Renewables Obligation Scheme, all licensed electricity suppliers are required to supply an increasing proportion of electricity from renewable sources in each 12 month “obligation period”.
Under this obligation order, energy regulator OFGEM issues a Renewable Obligation Certificate (ROC) for each MWH of electricity generated from an eligible source.
A supplier can comply with the obligation in one of two ways, or by a combination of both. It can present sufficient ROCS to meet its obligation or it can use the buy-out price to OFGEM for each MWH of its obligation for which a ROC is not held.
What is the Climate Change Levy (CCL)?
The Climate Change Levy (CCL) is a government tax on the use of energy by business, agriculture and the public sector; it applies to both gas and electricity. It does not apply to fuel used by the domestic or transport sector, or fuels used for the production of other forms of energy and for non-energy businesses.
Why is the CCL being Introduced?
The aim of the Levy is to encourage Industry, commerce and the public sector to improve energy efficiency and reduce greenhouse emissions
How much will the tax cost?
The levy is charged at 0.177 pence per kWh for natural gas and 0.509 pence per kWh for electricity.
What happens to the proceeds of the levy?
The proceeds of the levy are to be recycled back into business through a 0.3% cut in employer's national insurance contributions. The levy is designed to be revenue neutral.
How does the charge appear on my invoice?
CCL is shown as a separate charge between the total consumption and VAT. It will be subjected to the standard rate of VAT.
Are there any exclusions / exemptions to CCL?
Exclusions apply to consumption below the de minimus limit of less than 4,397 kWh (150 therms) per month for gas and 1000kWhs for electricity and supplies where VAT is charged at 5% (i.e. domestic supply). If you have a mixed usage site, CCL will be applied to the industrial and commercial consumption only (A VAT exemption form will be required by the suppliers in cases of split consumption).
There are various other exemptions which apply depending on the type of the fuel, its source, and purpose for which it is used. For example, "Good quality CHP's" and energy not used as fuels are exempt.
Can I Qualify for a reduced Rate?
Energy Intensive Users (EIUs) can qualify for an 80% reduction subject to trade sector agreements with the DETR based on the efficient use of energy.
The Horticultural Industry is subject to 50% rebate for 5 years.
What is a REC?
Regional Electricity Company is the name given to the electricity distribution company that controls the supply network in a particular region.
What is an Energy Only Offer?
This is an offer for Half Hourly electricity that excludes DUOS, TUOS and settlements. Energy only prices can be at Power Station Gate, Grid Supply Point or at the customers Supply Terminals (see below for explanation of these terms).
What is an all-inclusive Offer?
This is an offer for Half Hourly electricity that include DUOS and TUOS.
What is DUOS
The Regional Electricity Company (REC) is responsible for distributing electricity to all sites within its own region regardless of whether or not they hold the contract for supply. The RECS levies a cost for this service - Distribution Use of System Charge, this cost is passed to the customer.
What is TUOS?
Transmission Use of System Charges are made by the National Grid to each supplier for the transmission of energy through the National Grid
What are Settlement Charges?
The settlement system is the system by which the customer's half hourly data is transmitted from the meter to the supplier for billing - the cost for this service is covered in the settlement charge.
What is Available Capacity?
Sometimes called Availability. The physical capacity of the electricity supply into the building. The electricity distributor will charge for the amount of capacity that is made available to the customer.
What is a Meter Operator?
Any qualifying site that wishes to benefit from contract rates must appoint a meter operator. It is the function of the meter operator to maintain the half hour data meter and collect the data by means of a communication link, which is normally a telephone line. A charge is made for this service, with a separate charge for the communications link, which varies from area to area.
What is MD?
Maximum demand is a recording of highest rate of flow (demand) of electricity in any particular month. MD is measured in KVA or kWhs. Charges based on maximum demand are used to recover the cost of electricity transmission through the national grid.