Dear Mr Clark,
We work with over 8000 businesses across the UK, from housing associations and NHS Trusts to the largest high street brands and most energy intensive firms in the country.
For the past 18 months, we have been running a Have Your Say campaign with business energy professionals, inviting them to give their views on government consultations and issues that concern them, from the business energy efficiency tax review to proposed changes to embedded benefits. Again and again, we have been told by businesses that they need more certainty around future energy policy. The transition towards a low carbon, smarter and more dynamic energy market offers great scope for the UK, but its cost will be borne by UK businesses far more than domestic users, from the cost of supporting new technology to responding to new regulation.
Businesses were hopeful that the Autumn Statement would deliver more clarity, from the future of the Carbon Price Support, to the cost of supporting low carbon technology beyond 2020, and were left disappointed at the lack of focus on energy.
We welcome those decisions already taken by this Government to address this need for certainty, from a much overdue decision on Hinkley C and the approval of the fifth carbon budget to your most recent announcements around the closure of coal plants and additional support for low carbon technology through the Contracts for Difference mechanism. These all serve to provide greater direction for businesses as well as providing greater insight into future costs that they will incur and the future risks they may face.
However, there remains a strong sentiment of confusion amongst the community of business energy professionals. The recent decision to withdraw Demand Side Balancing Reserve scheme just months before winter risked undermining business confidence in demand response when their involvement in future years will be critical. Scrapping the Carbon Reduction Commitment and recover its revenue from a rise in the Climate Change Levy will see energy costs rise by up to 25% for some businesses before the end of the decade, when combined with other rising non-commodity charges.
Procuring additional capacity for the new Capacity Market could preserve security of supply but will add hundreds of millions of pounds onto the cost of the scheme for businesses, at relatively short notice. In April, businesses were informed that there would be a single reporting framework introduced to merge the multiple compliance schemes, but no additional information has been forthcoming, despite the fact we are almost one year in to the second phase of the Energy Savings Opportunity Scheme.
All these decisions have a major impact on the forecasting, planning, resourcing and bottom line of the UK’s organisations.
At a recent industry event, we invited business energy professionals to tell us what they felt BEIS needed to prioritise in energy in the coming year. The overwhelming consensus was greater clarity around future policy direction, more certainty over rising non-commodity charges, and improved consensus around low carbon investment and the future direction of the carbon floor price. A summary of their feedback is attached.
Ahead of the spring 2017 Budget, we ask you to consider the concerns of businesses and deliver a long term vision for energy policy with a clear framework of delivery, rather than more changes that businesses must respond to and implement. Businesses require greater clarity around the future of energy policy and greater consistency to provide them with the confidence to plan for the long term.
I would welcome the opportunity to discuss this further with you or your team. Inenco is also holding a number of customer events in early 2017 and we would welcome representation from your Department to discuss these issues with business energy professionals directly.
Chief Executive Officer, Inenco Group