Policy Update

Bedfordshire Council

Tony ODonnell
Client Lead
 EMR Update
.

No CfD Costs until July

The Low Carbon Contracts Company (LCCC) have published a CfD Interim rate of zero until 30 th June 2016. Until this date
the only charges for consumers to pay is the operational rate associated with the running of the LCCC.

Energy Intensive Exemptions from CfD costs delayed until Summer

In December EU State Aid approval was granted for Energy-intensive industries exemptions. BIS (Business, Innovation and
Skills Dept.) are now in the process of passing the necessarily legislation so this is not expected to be in place until the
Summer. Once exemptions are in place, all other consumers will pick up more of the costs as a result.

Capacity Mechanism costs coming a year early

DECC have consulted on bringing the first full year of the CM forward to 2017/18 in order to ensure security of supply. They
propose an auction in early 2017 for the full capacity required for Oct 17 Sep 18.The consultation closed on 1st April and we
await DECCs final decision.
This will result in higher costs from Oct 2017 than originally expected for customers.

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 Excess Capacity Charges

Excess Capacity Charges (DCP161)

Ofgem approved modification DCP161 in 2014 which intended to charge excess capacity charges to all those customers with
a direct Capacity agreement with their DNO.

At the moment customers pay the same rate for any capacity used above their agreement.

This was intended to be more reflective of charges incurred and incentivise consumers to have the right agreements with their
DNOs to enable better planning.

The change was originally meant to go live in April 2016 however with the implementation of P272 It was considered to be
harsh on customers that had not previously had capacity charges in place or had the adequate data on which to base a
capacity agreement.

Therefore there were calls to change this to April 2018 which was confirmed by Ofgem in Oct 15.

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 Changes to CRC

Treasury are reviewing the Business Carbon Tax Landscape

The Main proposals are;

To develop a single reporting framework, incorporating the most effective elements from the current reporting schemes & to
reduce the cost of compliance to businesses
To move towards a single tax by abolishing CRC & moving the revenue raising element in to a single business energy
consumption tax based on the CCL
Open to considering options for new incentives for energy efficiency and carbon reduction.

What does this mean for our customers;

At this stage the consultation raises more questions than it does answers
The consultation that was published last year is very vague on the details of what the tax reforms could look like but the
principles of simplifying reporting is a positive step
For some customers a one tax system could mean an increase to their costs (no impact assessment was released as part
of the consultation but rough calculations suggest up to 8% increase)
For customers with a CCA the future of this is uncertain, but policy seems to be to ensure only the most energy intensive
industries get tax relief in the future

Next Steps
Confirmed with the Chancellors Budget on 16th March.
Timescales for implementation are not from April 2019

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 What Is P272

Following the mandate for every PC5-8 to be AMR metered, Ofgem have approved P272 to make all PC 5-8s which have
successfully had an AMR meter installed, mandatory HH settled.

Ofgem believe P272 will promote competition by incentivising suppliers to offer a wider range of products for customers due
to the more accurate allocation of costs, putting stronger incentives on suppliers to reduce these costs by encouraging more
efficient consumption & demand side response (DSR.)

The P272 change originally had a deadline of 1st April 2016. However, Ofgem approved modification P322 Alternative as a
result of industry concerns on the impact to customers.

P322 introduces a start date for the change to HH settlement of November 2015 and an extended end date of 1 st April 2017
for all meters to be transferred over.

More accurate pricing

P272 will mean more reflective charging as the customers costs will be based around their actual usage not industry standard
consumption profiles. This gives the customer opportunities to monitor their consumption patterns and realise the savings
through their future energy costs. Moving forward customers will agree a HH contract with us and a separate metering
contract. We will talk the customer through these changes and all our charges are transparent and known upfront

Giving more control

Our metering contracts are fully inclusive of all MOP & DC services and give the customer access to Encompass as standard.
Encompass allows the customer to review their usage at half hourly granularity across their whole portfolio, in order to
understand inefficient areas and develop a strategy for improvements