Referral of the proposed Energy Intensive Industry (EII) Businesses Exemption from Nuclear Regulated Asset Base (RAB) Policy Costs subsidy scheme by the Department for Energy Security and Net Zero (DESNZ) and the Department for Business and Trade (DBT)

The Subsidy Advice Unit (SAU) has published its report providing advice to DESNZ and DBT concerning the proposed EII Exemption from Nuclear RAB Policy Costs subsidy scheme.

From:
Competition and Markets Authority
Published
7 May 2024
Last updated
17 June 2024 — See all updates
Case type:
SAU referral
Case state:
Closed
Market sector:
Energy
Opened:
3 May 2024

Administrative timetable

Date Action
17 June 2024 Final report published
20 May 2024 Deadline for receipt of any third-party submissions (submissions after 5pm on this date cannot be taken into account)
3 May 2024 Beginning of reporting period

Final report

17 June 2024: The SAU has published its report providing advice to DESNZ and DBT concerning the proposed EII Exemption from the Nuclear RAB Policy Costs subsidy scheme. The report sets out the SAU’s evaluation of DESNZ and DBT’s Assessment of Compliance of the proposed scheme with the requirements set out in the Subsidy Control Act 2022.

Request from DESNZ/DBT

3 May 2024: The SAU has accepted a request for a report from the DESNZ and the DBT in relation to the proposed EII Exemption from the Nuclear RAB Policy Costs subsidy scheme. This request relates to a Subsidy Scheme of Particular Interest.

Information about the subsidy provided by DESNZ and DBT

EIIs are businesses whose energy costs constitute a significant percentage of their overall operating costs. They play a significant role in the UK economy, employing around 400,000 workers and they have a gross value added of £33.7 billion (1.7% of the UK economy). Their turnover is around £135bn and in 2022 their exports totalled around 33% of total UK exports. They also support thousands of additional indirect jobs as part of the wider supply chain, with many providing higher than average wages in more economically vulnerable areas.

Despite existing government support schemes being applied, typical electricity costs for the most energy-intensive industry users in GB are higher than those in EU countries. Failure to tackle high electricity prices risks GB losing these critical sectors for good, resulting in the need to place much greater reliance on import markets, sourcing goods from territories with less stringent climate policies which would lead to carbon leakage. This is both a risk to the UK’s economic security and efforts to reduce global emissions.

The Department for Business and Trade and the Department for Energy Security and Net Zero are proposing a subsidy to exempt GB-based eligible EII businesses from 100% of the forthcoming Nuclear (RAB) policy costs, to align with the approach taken for other renewable policy costs (Contracts for Difference (CfD), Renewables Obligation (RO) and small-scale Feed-in Tariffs (FIT) schemes) awarded under the British Industry Supercharger scheme introduced in April 2024. This subsidy will ensure consistency across renewable support schemes policy in GB and prevent government support for new nuclear, which is required to meet our decarbonisation targets, having a disproportionate impact on EIIs.

The costs removed from the bills of eligible EIIs will be redistributed to other billpayers, including households and non-eligible businesses. The impact on non-eligible billpayers is limited to what is necessary to exempt eligible EIIs from 100% of Nuclear RAB policy costs. How much this adds to an annual electricity bill for a non-eligible business will depend on the overall size of the business and the amount of electricity they use, but this would represent a marginal charge to electricity bills for non-eligible businesses in 2025.

Information for third parties

If you wish to comment on matters relevant to the SAU’s evaluation of the Assessment of Compliance concerning DESNZ/ DBT’s proposed EII Exemption from the Nuclear RAB Policy Costs subsidy scheme, please send your comments before 5pm on the date stipulated in the timetable above. For guidance on representations relevant to the Assessment of Compliance, see the section on reporting period and transparency in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Please send your submissions to [email protected] and EII[email protected].

Please also provide a contact address and explain in what capacity you are making the submission (for example, as an individual or a representative of a business or organisation).

Notes to third parties wishing to make a submission

The SAU will only take your submission into account if it can be shared with DESNZ and DBT. The SAU will send a copy of your submission to DESNZ and DBT together with its report. This is to allow the public authority to take account of the submission in its decision as to whether to grant or modify the subsidy or its assessment. We therefore ask that you provide express consent for your full and unredacted submission to be shared. We also encourage you to share your submission directly with DESNZ and DBT using the email address provided above.

The SAU may use the information you provide in its published report. Therefore, you should indicate in your submission whether any specified parts of it are commercially confidential. If the SAU wishes to refer in its published report to material identified as confidential, it will contact you in advance.

For further details on confidentiality of third party submissions, see identifying confidential information in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Contacts

Updates to this page

Published 7 May 2024
Last updated 17 June 2024 + show all updates

  1. Final report published.

  2. First published.

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