The government has announced the details of a proposed compensation scheme that will allow energy intensive users to recoup charges paid for using the GB electricity grid.
The EII Network Charging Compensation (NCC) Scheme will allow energy intensive end users to claim back 60% of eligible network charging costs (TNUoS, DUoS and BSUoS).
Subject to getting the necessary legislation in place, it is set to launch in April 2025 and support for EIIs will be backdated to 1 April 2024.
Eligibility for the NCC Scheme is contingent upon an EII holding a valid EII Exemption Scheme certificate. This is issued by the government to eligible EIIs to demonstrate they qualify for the EII Exemption Scheme, and the other British Industry Supercharger measures once these schemes commence.
The NCC Scheme will be funded via a new EII Support Levy, placed upon licensed electricity suppliers within Great Britain. Compensation will be paid out to EIIs in arrears once the funds have been raised via the Levy. EIIs will be required to provide evidence of the network charges they have incurred, which will be used to calculate the necessary obligation to be raised from suppliers via the levy.
This means that network costs incurred by an EII in April 2024 will be compensated in 2025 after the necessary funding is raised via the Levy.
Certain elements of scheme design require input from the scheme administrator. Once appointed, government will work with them to determine whether quarterly compensation payments work, or whether a more regular cycle that tracks the monthly levy collection would be more feasible. In any event, the burden to EIIs in terms of supplying evidence of costs incurred will be on a quarterly cycle. At the latest, EIIs could expect their first compensation payment to be made at the end of the first quarter after the commencement of the Scheme.
The below timeline demonstrates the operation of the schemes:
The introduction of the NCC is the last of three measures announced by the government in February 2023 to make Britain’s strategic energy intensive industries more competitive across Europe and tackle the challenge of indirect carbon leakage. The measures were dubbed the “British Industry Supercharger” – and included an increase in the subsidy under the existing EII Renewable Levy Exemption scheme and a new full exemption from the indirect costs associated with the GB Capacity Market.
For further reading, check out our complete guide to support for energy intensive industries. Or, get in touch with our EII experts for advice on securing support
If you are an energy intensive organisation and would like to know more about NCC, get in touch with our experts at Sustainable Energy First for a no-obligations chat.