Member Article

Don’t get caught out: energy policy and regulation (Q1)

The General Election campaign is set to continue dominating the political landscape for weeks to come but there is still policy being developed and implented each day. Energy is a policy area which is constantly evolving, so it is easy for businesses to be caught on the back foot. With a multitude of acronyms and dense technical language, energy policy and regulation can confuse even the most diligent policy enthusiasts. For businesses without an energy expert on the books, this can make navigating the energy policy landscape a challenge at best and a minefield at worst. Changes in policy and regulation often have a direct, and legally-binding, impact on a business’ operations, so it is vital to stay on top of developments so that you have plenty of time to make sure your business is compliant. For those in rented premises – or the landlords who rent those buildings - not improving the energy efficiency of commercial property, for example, could mean that it can’t be re-let in a few years’ time.

E.ON wants to help businesses manage their energy usage and navigate policy changes effectively, so we have digested some of the key updates and changes of the last three months. In this first digest of the year, we focus on the Budget, new energy efficiency regulations, incoming changes as a result of Electricity Market Reform and changes to gas network costs. We have pulled out the main policies and regulations that may impact your business, whether you’re a family-run start-up or a national corporation.

1) Be aware of the phasing out of aggregated gas supplies:

If your business has several separately metered premises in close proximity you may well have aggregated gas supplies. This is when two or more meter points (specifically the Meter Point References or MPRs in industry jargon) are joined together to form one supply point. Previously, when businesses had two or more premises together this had been allowed. However, under the Gas Transporters’ new Modification 428, since April 2014 no new aggregations have been permitted and all existing aggregations will need to be split by the end of June 2015 so each meter point or site is charged separately. This is a mandatory change that will impact all energy suppliers and all customers with an aggregated supply.

Your energy supplier should let you know once they’ve started this process, but do check with them if you’re unsure. For E.ON customers, once the changes are in place your bill may look different because your accounts may be set up, charged and priced individually.

To read Ofgem’s publication on Modification 428 in full visit the regulator’s website and search for ‘428’.

2) Make sure any properties you own comply with new regulations around energy efficiency:

Commercial properties in England and Wales rated F or G on their Energy Performance Certificates can no longer be let until their energy efficiency improves to at least an E rating. The EPC indicates the energy efficiency of the building fabric and the heating, ventilation, cooling and lighting systems. The regulations cover the non-domestic private rented sector as well as the domestic, but exclude short tenancies of six months or less. These new laws come into effect from April 2018 for new tenants. Existing lets can continue to be let beyond 2018 without any change, but properties will need to be upgraded before any new tenancy begins after this date. From 2020 (domestic) and 2023 (non-domestic), the rules will apply to all privately rented properties.

If you’re a landlord and have concerns that premises you rent out might not meet these energy efficiency requirements, check out these tips on how to make improvements to your property to stop it leaking energy: https://www.eonenergy.com/for-your-business/small-to-medium-energy-users/saving-energy/five-steps/containment

With some suppliers, high-energy usage customers can access a pay-to-use data monitoring package and there are a number of business streams that can help manage business buildings once occupied.

3) Make the most of your chance to shape regulations:

When making decisions affecting your energy supply, you may well use a third-party intermediary such as an energy broker for advice or information. Back in February 2014, Ofgem proposed a new voluntary code of practice for energy brokers and other third party intermediaries to be clear with businesses about their fees and the suppliers they represent. Following industry input, Ofgem has been drafting new code and licence conditions and a statutory consultation is expected to begin at the start of Q2 2015. This gives you the opportunity to shape the regulations, so keep an eye out in the next month or so!

Things to look out for in the next quarter:

7th May: General Election.

21st June: Shortest day of the year, prompting a decrease in demand for heating and lighting but an increase in demand for air conditioning.

This was posted in Bdaily's Members' News section by Anthony Ainsworth .