By Ross Gill . March 7, 2019

If you’ve not paid much attention to the Climate Change Levy (CCL) part of your energy bills up until now, it’s time to start taking notice.

 

As announced in the 2016 Budget, the CCL is due to increase from April 1st 2019 with some rates increasing by as much as 67%.

CCL is charged against your business energy consumption. If you’ve glossed over its impact up to this point, you can find your CCL charge included in your itemised bill. But why are rates increasing and what can you do about it?

Why are CCL rates going up?

We’ve known these rate rises have been coming for some time and we also know why they’re being hiked. The increase is designed to bridge the gap in revenue reduction caused by the closure of the Carbon Reduction Commitment Energy Efficiency scheme:

“In the Budget on 16 March 2016, the Chancellor of the Exchequer announced that the government has decided to close the CRC scheme following the 2018-19 compliance year. Doing this will significantly streamline the business energy tax landscape by replacing it, in a revenue neutral way, with an increase in the Climate Change Levy.”

Varying CCL main rates are paid across electricity, gas and solid fuels.

Will your business be hit by the increased CCL rates?

It’s time to dig out your last energy bill because customers who are already paying CCL will likely see increased CCL payments. Unless of course your business circumstances have changed to render you exempt this time around.

Public services, industrial, commercial and agricultural companies are charged CCL rates on ‘taxable commodities’ used for heating, lighting and power. If you can’t find CCL itemised on your bill, you could be one of the businesses exempt from the paying main CCL rates. CCL exclusions include some charities (non-commercial) and nursing homes along with transport businesses.

It’s also very important to note that the CCL is designed to incentivise energy efficiency. Businesses who consume below the small quantities (de minimis) threshold of 1,000 kWh per month are exempt from paying CCL. Alternatively, if you’re part of a sector association that’s part of the Climate Change Agreement scheme, you will be charged at a reduced rate.

At present there is a 90% CCA reduction of CCL on electricity and 65% for other fuels (gas and solid fuels). However, the reduction levels are due to increase when the new higher CCL rates kick in. CCA Scheme CCL reductions will increase to 93% and 78% respectively from April 1st.

Preparing for the CCL rate rises

As CCL is linked to your energy consumption, improving energy efficiency and reducing your consumption will lower your liability. Bring your monthly consumption levels down far enough and you could avoid CCL charges for the period by coming in under the small quantities threshold. Ensuring your business is on the best possible tariff could also help to bring down the energy cost component of your bill.

At the Electric Board our trained energy consultants will work with you to understand the needs of your business, helping you to make sense of your bills. To discuss your energy requirements and have a no-obligation chat, call us on 0800 254 5054.