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Understanding the New EII Support Levy on Electricity Bills
A new charge is set to appear on electricity bills across Great Britain: the EII Support Levy. But what does this mean for businesses, and how will it impact your energy costs?
What is the EII Support Levy?
In late 2023, the UK government introduced the Network Charging Compensation (NCC) scheme to provide financial relief to Energy Intensive Industries (EIIs). Under this scheme, EIIs will receive 60% compensation on eligible network charges.
To fund this initiative, all licensed electricity suppliers in Great Britain will be required to contribute through the EII Support Levy. In turn, suppliers are expected to pass this charge on to non-domestic electricity consumers, resulting in an additional cost on business energy bills.
What’s the Latest Update?
Elexon has released initial estimates for the levy’s cost over the first five months of implementation (April 2024 – August 2024). Moving forward, these figures will be updated monthly. However, suppliers are still determining how they will pass these charges on to their customers.
Most suppliers have change of law clauses in their agreements, allowing them to recover unexpected government-imposed costs. The challenge is that while an overall estimated cost is available, the specific allocation per supplier remains unclear. Furthermore, from September 2024 onwards, levy amounts will only be confirmed on a monthly basis.
What Should Businesses Expect?
Different suppliers are likely to take varying approaches when incorporating the levy into electricity bills:
- Fixed Price Contracts – Some suppliers may choose to delay passing on the charge until a contract renewal, simplifying the billing process.
- Flexible and Pass-Through Contracts – Others may apply charges retrospectively, meaning businesses could receive additional charges in May 2025 for consumption dating back to April 2024.
- Recent Consumption Approach – Some suppliers may choose to recover costs based on recent usage, meaning charges will be more immediate.
- Supplier Variations – If you switch suppliers, you could still receive invoices from your previous supplier, depending on their methodology for applying the levy.
Key Actions for Businesses
- Monitor Supplier Communications – Stay alert for any updates from your energy provider.
- Review Billing Changes – Keep an eye on how these charges are reflected on your invoices.
- Understand Contract Terms – Ensure all cost elements, including this levy, are factored into any renewal offers.
- Seek Expert Advice – Understanding the evolving landscape of energy costs is crucial to effective financial planning.
At GLEG, we help businesses navigate complex energy market changes and optimise their contracts. If you have any concerns about the EII Support Levy and its impact on your business, get in touch with us at hello@gleg.co.uk. Let’s work together to ensure you stay informed and in control of your energy costs!