Latest Energy Matters report reveals retail sector concerned about energy policy costs

The latest edition of Energy Matters, npower’s quarterly policy update for Industrial & Commercial customers, reveals that many retail businesses don’t realise the potential implications of Government policy on how much they pay for energy.

Energy Matters aims to demystify new and proposed pieces of legislation to explain their impact on the bottom line of UK businesses. The latest issue focuses on Contracts for Difference (CfD), a key element of the Government’s Electricity Market Reform (EMR), and how it will affect the retail sector in particular.

CfDs, which launch later this year, are designed to help reduce the UK’s carbon emissions and encourage investment in low carbon electricity generation. Like other Government low carbon energy schemes, CfDs are funded through a compulsory levy or obligation on energy suppliers, who pass the cost to consumers in their energy bills (eligible Energy Intensives will be exempt).

The Government has predicted that CfDs will see retail customer bills increase by 10% by 2020. All npower customers with itemised bills will see a CfD line split out, and npower anticipates this will start to appear from April 2015 at approximately £0.5/MWh and increase on a quarterly basis to approximately £8/MWh by 2020.

From speaking to UK retail businesses, npower found a lack of awareness of government energy policies and as a result a significant number of companies and organisations are uninformed of how they will be affected. When told about the likely increase in their energy bills as a result of CfDs, 85% of retail businesses said this made them either ‘very’ or ‘fairly’ concerned.

Wayne Mitchell, Head of Industrial & Commercial, said:

“Energy infrastructure projects are essential in ensuring Britain is ready to achieve a smarter low-carbon energy future, but our own research shows that almost half (47%) of UK retail businesses are not very or not at all confident that current energy policies reflect their needs. 53% feel the same about planned initiatives.

Not surprisingly businesses are failing to plan for their energy futures or take notice of government energy policies designed to help them do just that – despite the implications for their organisations’ bottom line.

Government and the wider energy industry needs to work together to better educate businesses about low carbon energy policies. By communicating clearly the intention and impact of EMR measures like CfDs, we believe businesses will be in a much better position to make important decisions around on-site power generation and demand side usage – changes they need to start planning now.”

Download the latest Energy Matters edition (PDF, 2.79MB)