Many business owners and managers will already be familiar with the unit rate and daily standing charge on their commercial energy bills. Some may have also noticed that their company pays other fees for energy too.
The standing charge is made up by combining the following two amounts: Transmission Use of System (TNUoS) charge and Distribution Use of System (DUoS) charge. Your company’s location and energy consumption pattern will determine what these amounts will be along with other factors. In addition to this, you will also be expected to pay VAT (Value Added Tax) and a special duty called Climate Change Levy (CCL).
As these costs add up, it’s more important than ever to save as much money as possible on gas and electricity. One of the most effective ways to achieve this is by using business energy comparison site, Utility Saving Expert to compare commercial suppliers and tariffs. To get a free no obligation quote, simply enter a few details about your business and energy consumption. You will then be able to view a whole range of deals from leading providers, which can be sorted by price. Offers will include the price, tariff type, contract length along with other features and benefits. Comparing different suppliers and tariffs is easier than ever, and shouldn’t take longer than 10-15 minutes. Reducing gas and electricity consumption by becoming more energy efficient in the workplace will also help customers lower their monthly or quarterly bills.
So, what actually is the Climate Change Levy?
Effectively, the Climate Change Levy (CCL) was introduced and became effective nearly two decades ago. The initiative was to encourage business customers in the agricultural, commercial, industrial and public service sectors to lower their energy usage in an effort to reduce greenhouse gas emissions. The levy is charged on ‘taxable commodities’ that are provided for heating and lighting. Power purposes such as electricity, coal, natural gas, petroleum and hydrocarbon gas in liquid form to name just a few are also used.
There are exemptions too. Charities that use gas and electricity for non-business purposes, domestic customers, and low consuming business customers do not have to pay the Climate Change Levy.
How much does the CCL cost?
Climate Change Levy rates are calculated on the basis of per kilowatt hour (kWh) of usage. Natural gas was levied at 0.203p and electricity was 0.583p between April 1st 2018 to March 31st 2019. This increased in the following year. Between April 1st 2019 to March 31st 2020, natural gas was levied at 0.339p and electricity was 0.847p. The rates have constantly risen over a number of years, especially since 2015.
You won’t need to calculate this yourself, as your business energy supplier will work out what amount you will have to pay and include the CCL in each bill. This information will also be forwarded on to HM Revenue & Customs. The charge will be displayed as a separate item on each bill you receive.
How do I reduce these payments?
The only realistic way to reduce these payments is to increase energy efficiency in the workplace and/or consume less gas and electricity. This is because the Climate Change Levy is charged in accordance with the amount of energy you use. There are a number of benefits to doing this.
First and foremost, you will save money which can be invested into other areas of the business. Secondly, your public image and reputation will improve for being sustainable. Thirdly, the environment will benefit as your overall carbon emissions will be reduced, contributing to a cleaner future for all. It is worth noting that since 2015, renewable energy, sometimes referred to as ‘green energy’ no longer qualifies for an exemption from the CCL charge.
If you wish to lower the amount your firm pays for the Climate Change Levy, you’ll need to register for a government Climate Change Agreement (CCA). The amount you pay could decrease by a staggering 90%. Simply put, you’ll be signing a contract that determines the various ways in which your company will commit to reducing energy usage, in addition to the steps you’ll be taking to achieve this.
How to improve energy efficiency?
There are a number of simple steps businesses can take towards improving their energy efficiency. These steps will help them save money and reduce carbon emissions. Here are just a few common examples:
- Turn off lights and electrical appliances when not in use
- Install LED light bulbs
- Automate lights and heating with smart technology
- Lower indoor temperature by one to two degrees
- Take advantage of natural sunlight
- Conduct a business energy audit
By now, you have hopefully got a better understanding on what the Climate Change Levy is, how it’s calculated and what steps you can take to reduce the charge as well as your total business energy costs.