Every business faces overheads. Whether you’re a one man band or a multi-national corporation, there are always costs to consider in running your enterprise. But often the larger the organisation becomes the more challenging it is to keep an eye on the detail that can make a significant difference.

The truth is that business energy costs are often a source of significant money wastage. At The Energy Check we spend our working week helping businesses to get a handle on their utility bills and find ways to save money. Often this can be through the procurement of more suitable contracts, at other times it might be installing technologies that can save energy usage across an entire estate. And sometimes it can mean getting to grips with new legislation and ensuring that companies don’t fall foul of hidden costs. Among the key changes to the energy sector coming in 2021 is Ofgem’s Targeted Charging Review (TCR). Here’s what you need to know.

An introduction to the TCR

Under the Targeted Charging Review (TCR), the energy regulator has assessed how residual network charges should be set and recovered in Great Britain. Sweeping changes to transmission (TNUoS) and distribution (DUoS) residual (or sunk) network charging structures are expected from April 2021 onwards, as the current Triad demand system is replaced with a fixed charge based on a site’s available capacity. Under the new system, the focus will shift from measuring capacity based on time-of-use towards a fixed charge based on overall capacity. Four bands will be brought in to decide on the level of charges, based on site capacity and voltage of connection. This structure will help to ensure that large industrial and commercial firms are no longer able to avoid residual costs through Triad avoidance.

What are Triad periods?

Triad periods are the three highest winter peak periods upon which large companies’ transmission network charges are based. Although the dates and times of Triad periods are revealed retrospectively, many firms currently reduce consumption or switch to onsite generation during suspected Triad periods to reduce energy bills.

Historically, this form of energy management has been able to save large businesses hundreds of thousands of pounds each year. However, with the arrival of the new system, this approach will no longer be effective in reducing annual bills. While the pricing structure for the new system is yet to be released, it appears that Winter 2020/21 will be the last opportunity for Triad avoidance savings to be made. A second review is also now underway considering “forward looking” charges designed to provide consumers with pricing signals that will encourage specific consumption behaviour. The details of this review are still unknown, however.

Procurement challenges

Another knock-on effect of the new reforms may be that it becomes harder to deliver procurement prices for the period post April 2021. In fact, it is likely that suppliers will look to recoup losses from the new TCR charging system on contracts that are currently being negotiated.

What can businesses do to manage energy costs effectively?

For businesses that have worked hard to avoid winter Triads and timed charging periods in the past, the focus of energy management efforts must now focus on Agreed Supply Capacity (ASC) with the Distribution Network Operator – otherwise known as kVA charges. From April 2021, available supply capacity will be used to determine the pricing band a business falls into – and therefore the fixed price in the annual bill. This means that it will be more important than ever for organisations to monitor kVA effectively and manage capacity consistently to ensure that they do not find themselves in a more expensive band. Initially, a business’s available capacity will be measured from the last 24 months to establish which pricing band it should be entered into. This will become a fixed price on an organisation’s monthly energy bill until it can be proved that kVA should actually be lower. The TCR changes will also affect Non Half Hourly businesses – although it is possible that many may benefit from the new measures by seeing a reduction in their overall energy bill. Ultimately, the new regulations will bring about a shift in mindset for businesses. Where previously organisations had looked to reduce consumption during particular times of the day and certain times of year, they should now focus wholly on reducing total consumption. This may take the form of energy efficiency measures and controls to identify waste, which makes it possible to lower the fixed price on each bill.

While April 2021 may feel like it is some time away, realistically it does not provide businesses with much time to prepare for these significant changes to the way their utility bills are calculated. By working with our team of energy saving experts you can help to reduce the impact of these changes and ensure that future savings can be maximised and costs kept low.

Call us today: 0191 691 1802

At midnight on Wednesday 10th June 2020, in the midst of the coronavirus pandemic, the UK quietly but significantly passed a huge landmark. It went two full months without burning coal to generate power.

There was a time when this would have seemed completely unfeasible. More than a century ago, in 1913, coal production in the UK peaked at 292 million tonnes. Flash forward sixty years to the 1970s and coal still accounted for over half of the UK’s energy. Even more recently, in 2010, about 40% of the country’s electricity still came from coal.

The dramatic shift away from coal in recent years is thanks, in large part, to a growing national and international awareness of climate change and the environmental impact of burning coal for energy. But other factors, such as the current COVID-19 pandemic, also have a part to play.

So, is the UK looking at an energy sector without coal?

Coronavirus and coal

While two months without coal is significant, it shouldn’t be seen as a huge surprise. The summer of 2019 was also largely coal-free, with only the odd isolated day of coal use reported. Over the last eight years, coal’s energy share has fallen rapidly, with the final push to 0% being the most time-consuming part of the transition.

But there is no doubt that Coronavirus has helped to speed along this decline. While its hard to take any silver lining from the chaos inflicted by COVID-19, it has caused a huge drop in coal demand (not to mention petrol consumption). This has also been the case for other European countries. In France, coal use now rarely passes 1% of its total energy output.

Because of COVID-19, electricity demand in the UK was around 20% lower than average in recent weeks, which in turn means that the already waning demand for coal has also dropped drastically.

The move to renewables

Coal now supplies less than 5% of electricity generated in the UK, down from 40% as recently in 2012. This signals the likely success of the Government’s promise to ban all coal production in the UK in 2025.

Coal plants across the country have either been closed, or have converted to suit the greener times. One of the most significant instances occurred recently when Drax Power Station in North Yorkshire successfully converted four of its six generators to burn biomass instead. According to the Drax Group, this is Europe’s biggest decarbonisation scheme to date.

Moving to renewable energy reflects the growing awareness of the environmental impact of our energy which has occurred over the last few decades, but particularly in the last five years or so. Fuel sources like wind, wave, marine, hydro, biomass and solar are becoming more and more prominent in the UK as coal prepares to be phased out completely.

What does this mean for your energy?

Many energy providers, including the Big Six, now offer greener energy deals, and use greener sources for their energy. Some even offer perks for customers choosing greener deals as an incentive to reduce your carbon footprint.

Diversifying energy supply creates a more varied energy market, giving you the opportunity to shop around for the best deal and most suitable package.

Looking to find the cheapest traditional or green energy deal for your business? Get in touch with one of our experts today and let’s start the conversation. Give us a call on 0191 691 18 02 or click here to start comparing deals.

For the first time on record, US oil prices are in a negative due to the impact of nationwide lockdowns. But what does this really mean for the average business? Demand for oil has all but dried up on a global scale, as lockdowns force us all to stay inside. This has caused an unprecedented drop in oil prices. In fact, the price of US oil has fallen into negative territory.

This means that oil producers are actually paying buyers to take the commodity off their hands due to fears their storage capacities could run out in May. At present, oil firms are renting tankers to store their surplus supply.

The benchmark for US oil, West Texas Intermediate (WTI), recently fell as low as -$37.63 a barrel. Meanwhile Brent Crude – the benchmark for oil prices used by Europe and the rest of the world – has also seen significant drops. Based on their June contracts, the benchmark is operating at $26 a barrel, a drop of 8.9%.

How are exporters tackling the drop in demand?

Earlier in April, exporters agreed to a record 10% slash in global oil output. This was the largest cut in oil production ever agreed, but analysts say it’s still not big enough to make a significant difference. The world still has more crude oil than it can use, and capacity is filling fast on both land and sea.

It’s this simple fact which has caused the current oil climate. Due to the societal impact of the coronavirus, exporters are actually being forced to pay importers, businesses and consumers to take oil off their hands.

This is a dramatic shift brought about by these uncertain times, but there are ways for businesses to take advantage of it. Low oil prices may put a smile on your face at the petrol pump, but they can also impact energy prices more broadly. Now might be the best time for businesses to buy for the long term.

How can businesses take advantage of the oil price crash?

Such a significant drop in the price of crude oil will have a knock-on effect on the price of both business and domestic energy over the coming weeks and months. In February, a drop in wholesale prices had already resulted in a lowering of the price cap and it is now likely that suppliers will move to offer even more competitive rates in line with plummeting wholesale rates.

This means that for businesses looking to renew their energy contracts, now could be an opportunity to make a substantial saving and negotiate a new contract – particularly those that would otherwise be rolling on to a standard variable tariff over the coming months.

With the gap between the price cap and the cheapest fixed price tariff widening all the time, now is a crucial time for businesses of all sizes to pay attention to their energy contracts. By reducing monthly overheads, businesses can afford themselves some much-needed relief at a time when cashflow across many industries is proving to be a challenge.

Need advice on how your business should act on energy during these uncertain times? Speak to the team at The Energy Check today. Simply click here to get in touch.

There are only three things certain in life: death, taxes and … stealth taxes. But if you run a hotel, B&B or holiday park you could be due a rebate

We can all agree that tax can be a challenging part of running a business effectively. But what if we told you that there’s a stealth tax hidden within your utility bills that you could be claiming relief from?

The Climate Change Levy is a government-imposed tax that most organisations simply pay without question. But what exactly is it and why should you be looking into an exemption?

Getting to grips with Climate Change Levy (CCL)

As part of the UK government’s efforts to cut carbon emissions and boost energy saving, the CCL was introduced back on 1st April 2001.

The energy tax (not carbon tax) is part of the wider Climate Change Programme — a scheme launched by the government at the turn of the millennium. This aims to deliver on targets set at the 1992 Earth Summit, where the United Nations gathered to discuss the threat that rapid warming posed to humanity and the Earth itself.

The CCL was designed to target businesses that were deemed to profit from their energy use. It is imposed on all energy delivered to non-domestic users in the UK.

CCL exemption was available on renewables until 2015

Until 1st August 2015, renewable energy could be deemed exempt from the Climate Change Levy. Energy was defined as electricity, gas, solid fuel and liquid petroleum gas. As such, energy generated from certain renewable sources and Combined Heat and Power (CHP) could be exempt from tax.

As of 2015, this is no longer the case and all sources of energy are liable for tax regardless of their renewability – a step that many felt to be at odds with the original intentions of the levy. But although renewable exemption is no longer available, there are still a number of businesses and industries that are still eligible for total CCL exemption.

Who’s still exempt?

Businesses that use less than 4,397kWh per month of gas and less than 1000kWh per month of electricity do not have to pay the CCL under current rules.

Importantly, businesses that are permanently or temporarily using energy for the supply of domestic or mixed-use purposes are also eligible for the CCL exemption. This includes:

• Hospices
• Homes for children, the elderly or the disabled
• Caravans
• Houseboats
• Armed forces accommodation
• School and university accommodation
• Self-catered holiday accommodation
• Houses, flats and other dwellings
• Supplies to community heating systems
• Religious communities like nunneries and monasteries

And there are even more criteria for exemption too, such as:

• Your gas and electricity supplies are charged at 5% VAT
• Your supplies are not used as fuel
• Your supplies are used in certain forms of transport
• You supply to Combined Heat and Power schemes
• Your supplies are used to produce other forms of energy
• Your organisation is part of a Climate Change Agreement through a trade body

How much will I save if I’m exempt?

The short answer to this question is: it depends on how much energy you use each month. You can use the table below to calculate how much you are currently paying and how these rates may change over the next 18 months.

BUT it’s important to note that you can not only claim exemption in the future; if your business has incorrectly been paying tax in the past you can claim a rebate from the government for up to the last 4 years.

Find the Climate Change Levy rates here.

How to apply for a CCL exemption

If you are entitled to a CCL exemption, you can complete a PP10 and a PP11 form, available from HMRC. However, for many organisations the process of claiming exemption and chasing rebates can be time consuming and confusing. At The Energy Check we offer expert help and advice to ensure that you receive the rebate you deserve without any wasted effort or hassle.

Want to know if you could be benefitting from a CCL exemption? Get in touch with us today on 0191 691 18 02 or email welcome@theenergycheck.co.uk. Remember, we don’t charge any upfront costs for this service. We work on a no win, no fee basis and simply charge a percentage of any money we claim on your behalf.

Energy costs are a necessary part of business, but every entrepreneur wants the freedom to choose the best tariff

Ask any entrepreneur whether they’d like to spend less money, and chances are the answer will be yes.

Energy costs of one of the biggest costs facing new and small businesses, but shopping for a better tariff can help you lower these costs significantly.

However, an independent study found that less than half of businesses review their energy prices annually, and one in five only review them every 2-5 years. What’s more, one in 10 businesses never shop for a better energy deal.

So why is switching so important for businesses, and when can you do it?

When can you change your supplier?

You can switch your business energy supplier when your contract’s switching window opens. This is the time period – determined by your supplier – in which you are allowed to renew your contract or switch to a different supplier.

The length of your switching window will depend on your current provider, as it can range from 30 days before your contract ends to four months.

Make sure you check with your supplier so you know when your switching window opens. That way, you’ll avoid fees for switching delays.

Why does Ofgem want you to switch contracts?

Four words: Out of Contract rates. These are imposed once you’ve come to the end of your agreed contract with a supplier, if no further tariff has been agreed upon. In other words, if you just do nothing and let your contract roll over, you’ll end up paying these rates.

These imposed rates are much higher than contracted energy rates, and Ofgem warns businesses that contractors do very little to get you moved onto agreed terms. Should you still switch if you’re happy with your current supplier?

You might have no qualms with your current energy provider, but it’s still worth shopping around during your switching window, even if it’s just to have a look at what else is out there.

By comparing tariffs, you’ll get a better idea of how your current deal stands up against the competition. And if you still decide that you like your current supplier, you can see if there is a better deal available under that provider.

It’s also possible to negotiate on business contracts as you shop around – and that’s where our team of energy brokers come in. Find out more on 0191 691 18 02.

Can you change before the switching window?

Yes, but it might cost you. If you want to switch you supplier before your switching window has opened, chances are you’ll have to pay a cancellation fee which might be quite significant. So make sure the savings you’d make by cancelling are greater than the price you’d have to pay your current supplier.

For microbusinesses, you can provide a termination notice at any point in your contract, even though the switch won’t actually take place until the contract is up.

What if you’re moving locations?

If you’re moving offices, you’ll already have plenty to think about, but you should try to organise a new energy contract ahead of your moving date. However, you will need to provide a specific date, otherwise you risk being placed on Deemed rates, which are similar to Out of Contract rates but slightly less expensive.

In any situation, it’s best to seek out the advice of energy experts who can provide insight into the best course of action for your specific situation. That way, you’ll give yourself the best chance of a great new deal.

Start comparing business energy tariffs today with The Energy Check. Simply click here to find the best deal for you, or get in touch by calling 0191 691 18 02.