Post: Businesses to save over £400M/y as NCC scheme increased

Businesses to save over £400M/y as NCC scheme increased to 90%

Around 500 of the UK’s most energy-intensive businesses could save up to £420M/year on their electricity bills from next April, following the government’s plan to cut industrial energy costs.

Business secretary Peter Kyle announced on 31 October that government will go ahead with plans to increase the discount on electricity charges from 60% to 90% for sectors such as steel, cement, glass, and chemicals. The reduction is on network costs, which make up about 20% of a company’s energy bill. The scheme is applicable across England, Wales, and Scotland, and some of the companies which will benefit from the change include Tata Steel at Port Talbot, and INEOS in Grangemouth.

It will be funded through reforms to the energy system following a consultation earlier this year on the Network Charging Compensation (NCC) scheme, part of the Government’s British Industry Supercharger package of measures to tackle industrial electricity costs.

Business and Trade Secretary Peter Kyle said: “British industry deserves a level playing field; and this government is delivering it. We’ve heard businesses loud and clear, and this landmark support will help them stay competitive on the global stage so they can invest and grow here in the UK. This is our Modern Industrial Strategy in action: practical, targeted support that secures jobs, attracts investment and drives our economy forward, as part of our Plan for Change.”

What are network charges?

All users of Great Britain’s electricity network pay to use it. Users include generators, who use the network to transport the electricity they generate to where it is needed, and demand users who use it to obtain electricity when they need to use it. There are four main charges:

• Transmission Network Use of System (TNUoS): these charges recover the costs of installing and maintaining the transmission system and are charged to all suppliers and generators
• Distribution Use of System (DUoS): these charges apply to every connection to the distribution network and collect the revenue the Distribution Licensee needs to build, operate, maintain, repair and invest in the network
• Balancing Use of System (BSUoS): recover the costs of the day-to-day operation of the transmission system
• Connection charges: these recover the cost of installing and maintaining connection assets which connect individual users to the GB transmission network
• Assistance for Areas with High Electricity Distribution Costs (AAHEDC): recover costs for the north of Scotland which is currently the only area specified to receive assistance.

What is the NCC scheme?

The NCC scheme is part of a package of government measures to help Britain’s energy intensive industries (EIIs) remain competitive in the global market. This scheme offers eligible businesses compensation on network charging costs for using the GB electricity grid. This includes TNUoS, DUoS and BSUoS charges.

It is funded by a levy on electricity suppliers, known as the EII Support Levy. This will be charged from April 2025. The amount each supplier pays will be determined by their market share, generating funds used to compensate EIIs for the cost of the network charges.