CRC simplification consultation launched

The long-awaited CRC simplification consultation was launched today (27 March). As trailed in last week’s Budget speech, the aim is to reduce the complexity and administrative burden on participants; if this cannot be achieved, the scheme may be scrapped.

The consultation document is available on the DECC website; the deadline for responses is 18 June.

There are a large number of proposals for simplification; a few of these are unlikely to apply to the public sector, but most affect all participants. I have highlighted some of the key proposals below:

  1. Qualification –
    1. base future qualification on electricity supplied through settled half hourly meters only from Phase 2;
    2. threshold to remain at 6,000MWh.
  2. Supply rules –
    1. reduce number of fuels (electricity, gas, gas oil (diesel) and kerosene only) – the latter two only when used for heating;
    2. remove 90% rule, footprint report, core/residual distinction, residual measurement list – possible de minimis rule for gas oil and kerosene;
    3. remove requirement for payment to be made for supplies in order to qualify as a supply;
    4. include passive unmetered supply in scope of CRC;
    5. exclude profile class 01 and 02 electricity meters and non daily metered gas supplies consuming 73,200kWh or less (to be re-assessed annually);
    6. remove Electricity Generating Credits (EGC) from the scheme;
    7. adopt emission factors used for greenhouse gas reporting, updated annually;
    8. extend and improve obligation on energy suppliers to provide annual statements.
  3. Organisational rules –
    1. four options for the treatment of Academies;
      1. status quo, with possible changes to funding
      2. Academies participate as a group with Department for Education;
      3. Academies qualify with their Local Authority but may disaggregate;
      4. both schools and Academies participate in a separate scheme.
  4. Allowance sales –
    1. continue with retrospective sales throughout the introductory phase;
    2. remove emissions cap and safety valve mechanism;
    3. in Phase 2, hold two fixed-price sales each year, the price at the forecast sale to be lower than the price at the buy-to-comply sale;
    4. ability to trade on the secondary market and/or bank allowances within a Phase, but prevent carrying allowances over between Phases;
    5. from 2013 onwards, extend surrender deadline to end of September (for 2012, enforcement guidance will be set out).
  5. Performance league table (PLT) –
    1. retained, but rules on calculation of the metrics will be removed from regulations and placed in guidance to make them easier to change in future.

From a local authority point of view, most of these changes will be welcome. In particular, a combination of changes of could see some authorities fail to qualify for future phases – for example, removing AMR supplies from qualification criteria, together with the possible removal of schools/Academies, will reduce qualifying consumption significantly.

If you do qualify, however, the removal of the passive streetlighting ‘loophole’ may increase consumption (and allowance costs) significantly.

The Academies issue will not be resolved until Phase 2, but the options proposed now offer the prospect of genuine improvements.

We’d very much welcome your thoughts and comments, particularly on the impact these proposals will have on your organisation.