Levy Exemption Certificate (LEC) Withdrawal
In the summer budget, the Government announced the Climate Change Levy (CCL) exemption for renewable electricity would be removed from 1 August 2015.
Following this announcement, Levy Exemption Certificates (LECs) relating to renewable electricity generated on or after 1 August 2015 will no longer be eligible for the purposes of the CCL exemption.
There will be a transition period to redeem any LECs relating to generation before 1 August 2015; the length of this transition period is yet to be determined by the Government.
Formal legislation has yet to be passed as law but we expect this to happen in late October 2015.
Under the previous arrangement E.ON could purchase LECs from renewable generators meaning that any customers willing to pay a premium would be exempt from paying CCL.
How will this affect you?
Following this announcement we have been working to understand the effect on our customers who have levy exempt contracts and how we can help to limit this.
Whilst we are not able to absorb the full cost impact of these changes, we have held off taking any action until now, which means there will be no change in rates for you until 1 November 2015*.
This means that invoices for consumption from 1 November 2015* onwards for customers on levy exempt contracts will see two changes:
- The unit rate will be reduced (due to the removal of the LECs premium)
- CCL will be added to bills, this will show as a separate line item (subject to any existing Climate Change Agreement (CCA) or exemptions in place)
We will shortly be contacting you to confirm the specific rate changes before they are applied.
Are any customers not affected by these changes?
We are passing the charges on to all customers on levy exempt contracts, with the exception of micro businesses**. For our micro business customers on a levy exempt product there will be no changes to their rates and we will not be charging CCL for the remainder of their contract.
If you have a CCA you may still be entitled to a reduction in CCL.
You may also be exempt from paying CCL if a valid VAT declaration form or CCL Form PP11 has been provided by you relating to the way that the electricity is used.
What does this mean for customers agreeing new Corporate contracts?
Whilst we will not be offering new levy exempt contracts, we can continue to offer electricity generated from renewable sources. This will include a premium to cover the purchase cost of Renewable Energy Guarantees of Origin (REGOs). It should be noted that products backed by electricity from renewable sources are not considered evidence of purchased emissions reduction under DEFRA guidelines ***.
What do Ofgem say?
You can find the Ofgem report on this by visiting their website.
REGO backed supply
If you are still interested in a renewable supply, EON may still be able to help with our REGO backed supply.
For more information
Call us on 02476 42 42 42* or email firstname.lastname@example.org.
*Lines are open 8.30am–5.30pm Monday to Thursday and 8.30am–4.30pm on Friday
*This date may be subject to change, E.ON reserves the right to change this date, although no rate changes will be made before 1 November 2015.
**Micro business defined as having an annual consumption of no more than 100,000kWh of electricity, or 293,000kWh of gas; or has fewer than 10 employees (or their full time equivalent) and an annual turnover or balance sheet not exceeding 2 million Euros.
*** For guidance on how to measure and report greenhouse gas emissions visit: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/69282/pb13309-ghg-guidance-0909011.pdf