Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, pursuant to the Answer of 7 December 2017 to Question 116715, if he will list the levies that were imposed on non-exempted industries and consumers as a result of compensation paid to Energy Intensive Industries in respect of payments under (a) Contracts for Difference under the Electricity Supplier Obligations (Amendment & Excluded Electricity) Regulations 2015 and (b) the Renewables Obligation.

The Supplier Obligation and Renewables Obligation impose respectively a levy and obligation on electricity suppliers. They do not impose a levy on electricity consumers. However, the Government assumes that the costs of the levy and obligation are passed on to consumers through electricity bills.

Eligible energy intensive industries (EIIs) will be exempted from up to 85% of the costs of (a) the Contracts for Difference (CFD) and (b) the Renewables Obligation (RO). Both exemptions are expected to lead to an increase in bills for non-exempted industries and household consumers. In the case of the CFD exemption, this will be from November 2017, and in the case of the RO exemption, this will be from April 2018.

Our estimates of the future impact of the CFD exemption on the bills of non-exempted industries and household consumers are set out in Annex A of the Government response to the 2016 consultation on this exemption. For example, we estimate that it will add around £1 to the average household electricity bill and around £3,200 to the bill of a business that is a medium energy user in 2020/21:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/593191/eiis-exemption-from-indirect-costs-cfd-government-response-to-consultation.pdf

Our estimates of the future impact of the RO exemption on the bills of non-exempted industries and household consumers are set out in Tables 1 and 2 of the Government response to the 2016 consultation on this exemption. For example, we estimate that it will add around £2.30 a year to the average household electricity bill and around £6,700 a year to the bill of a business that is a medium energy user, on average, over the period 2017/18 to 2027/28:

https://www.gov.uk/government/consultations/implementing-an-exemption-for-energy-intensive-industries-from-the-indirect-costs-of-the-ro-and-the-fits

Prior to the introduction of the RO exemption, BEIS is paying RO compensation to eligible EIIs, with the costs met by the taxpayer. Prior to the introduction of the CFD exemption, there was no equivalent compensation scheme in place.