Following on from our January 2023 note regarding the announcement of the introduction of the Energy and Trade Intensive Industries (ETII) Support Scheme, the Government has published more complete details of the scheme, including eligibility criteria and the application process, which we have summarised (at a high level) in this note.
For further information please refer to Government guidance here and to our previous note.
To recap: from 1 April 2023, a higher level of support will be available for eligible non-domestic customers operating in the sectors identified as energy-intensive or, as within an ETII, which the Government views as particularly exposed to high wholesale energy prices.
The support will not apply automatically, and eligible customers will need to pro-actively register and apply to receive the support. Registration is due to open on 26 April 2023, but, as a reminder, the scheme will be backdated to 1 April 2023, and run for 12 months from that date.
Further Government guidance has also clarified that to qualify for support, you must have a non-domestic contract with a licensed energy supplier and be:
- On existing fixed price contracts agreed on or after 1 December 2021;
- Due to imminently enter into new fixed price contracts;
- On deemed, out of contract or variable tariffs;
- On flexible purchase (or similar) contracts; or
- On variable ‘Day Ahead Index’ (DAI) tariffs.
You must also be able to show that at least 50% of your revenue is generated from activity in an eligible SIC code sector, which have been designated as being “ETII”.
The ETII sectors were identified as those meeting certain thresholds for energy and trade intensity. The sector had to fall within the top 20% of sectors by energy intensity across the UK, and the top 40% of sectors by trade intensity. This has produced a wider set of qualifying activities than pre-existing compensation schemes.
The ETII activities include (although not exhaustively):
- Food production and processing;
- Manufacture of beers, cider and wine;
- Preparation, weaving and finishing of textiles and fabrics including leather and fur;
- Manufacture of home furnishings including carpets, rugs and articles;
- Manufacture of workwear and all other apparel and accessories including bags;
- Manufacture of construction and carpentry materials including concrete, lime and finishing stone;
- Manufacture of pulp, paper and cardboard;
- Manufacture of chemicals and chemical products; and
- Manufacture of agrochemical products and detergents.
For a full list of sectors, and to check if your business activities qualify, please see here.
The applicable support will take the form of a discount to energy bills which will reflect the difference between the price threshold and the relevant wholesale price, subject to a maximum discount cap.
The relevant thresholds and caps are:
- Electricity Threshold: £185 per MWh
- Electricity Cap: £89.1 per MWh
- Gas Threshold: £99 per MWh
- Gas Cap: £40 per MWh
The discount will only apply to 70% of energy volumes and the baseline level of energy bill support under the existing EBRS scheme can apply for the remaining 30% volume.
For those whose usage falls under but close to the threshold points, there will be an adjustment of the discount. The Department for Business, Energy, and Industrial Strategy (BEIS) will be working with energy suppliers to determine the applicable discount in these cases and we will be looking out for more information on this point.
It is important to note that this will only show up as one discount on your bill, as suppliers will complete one calculation for the overall discount owed.
The Application Process
Entities meeting the ETII requirements need to register for the scheme (i.e. the discounts are not automatically applied).
The registration process will require you to confirm details about your business, including your energy supplier, relevant energy supply contract(s) references and applicable meter point reference numbers (MPRNs).
A letter signed by a named director or equivalent person within your business must also be provided, to confirm that the information submitted in your application is accurate to the best of their knowledge, that the business operates in one or more ETII sectors (providing relevant SIC codes), a minimum of 50% of the business’ UK-based revenue in FY 22-23 falls within the eligible sector and a summary of how that organisation meets the criteria.
Financial evidence to determine eligibility may also need to be provided, such as accounts information, income statements and/or sales invoices. Applicants may also wish to consider uploading an external auditor, or accountant’s, letter.
There may be potential criminal law implications around knowingly making a false statement on behalf of your business, so directors will need to be mindful of their obligations in this regard.
BEIS will make an eligibility determination based on the details provided by applicants. Once eligibility is confirmed by BEIS, energy suppliers will be able to apply the discounted rates, presumably on a retrospective basis backdated to the scheme commencement date on 1 April 2023 (although for cashflow reasons, naturally you will want to ensure your business applies as soon as possible).
If you think your business is eligible, you will have 90 days to apply for support from the scheme opening date on 26 April 2023.
One criterion that Government may look at are the published SIC codes related to your company on Companies House. Whilst this assessment might be backdated to when the scheme was first announced, it would be prudent for all businesses to check their published SIC codes at Companies House, and to update these where they think that they incorrectly categorise their business.
Further information, a link to the online application portal (when it opens), and contact details for the BEIS customer service contact will likely be published at this link.
If you or your business require any assistance in interpreting whether you are eligible for the support scheme or require any general assistance with your energy requirements (including power purchase arrangements, with renewable installations (like solar panels or wind turbines) or anything else, please feel free to reach out to Andrew Kirke or your usual Tughans’ contact.
If you need assistance amending your SIC code, or with other company filing requirements, please feel free to contact our company secretary Donna Parker.