The following
questions are a sample of those that were raised during the first of our free
webinars on CRC held on 8th May 2013. We
intend to repeat this webinar and there will be others in the series on CRC to
follow from May 2013 to July 2013.
These questions
concern the changes to the CRC Energy Efficiency Scheme that are due to be
brought in by the CRC Energy Efficiency Scheme Order 2013. (This is referred to below as the CRC Order
2013.) Most of the questions concern the changes that will take effect in the
final two years of the current phase of CRC, ie from compliance year 2012-13,
since that was the focus of this first webinar.
However, some questions also address qualification for Phase 2.
Please note that this article
is not intended to provide legal advice and should not be relied on. It is not to be regarded as a full statement
of law and practice in this area and specific advice should be taken on matters
of concern.
Q Does gas
used for heating other than space heating have to be reported, and does gas
used for cooking count as heating gas?
A The draft
CRC Order 2013 says: “... gas is consumed for the purposes of heating where it
is used as part of a process where the primary purpose of that process is the
generation of heat.” This is not limited
to space heating, it catches all types of heating. There seems little doubt that the primary
purpose of a cooking process is heating the food, so cooking usage must be
included - unless the gas supply to it is through a meter that records less
than 73,200 kWh in the compliance year, or the 2% de minimis can be claimed.
Q How is a
heated swimming pool dealt with now?
A Assuming
it is heated by gas, the energy used to heat it will remain within the scope of
CRC because the gas is used for heating.
(Of course, if it is a domestic swimming pool it will not be caught.)
Q Is energy
used in temporary soldiers' accommodation (boot camps) caught?
A In
general, the energy consumed in temporary as well as permanent buildings falls
within CRC. However, supplies to domestic
accommodation are excluded, but "domestic accommodation" is limited
to premises intended to be used as a person’s permanent home. In addition, for the supplies to be excluded
the accommodation must not be provided in relation to a person’s education,
employment or service. Therefore, even
permanent soldiers' accommodation would not fall within the exclusion. The CRC Order 2013 doesn't change this, but
the changes to the types of meters that fall within CRC may have an impact: if
the boot camps are supplied through profile class 01 or 02 meters, or through
gas meters that deliver less than 73,200 kWh in the year in question, then
these supplies do not need to be reported.
Q Does the
energy consumed in buildings acquired after the qualification date count
towards qualification?
A The Phase
2 qualification period ran from April 2012 to March 2013 and only electricity
consumed by the organisation/group during that period counts towards
qualification. So, if a building was
acquired on, say, 13th January 2013, you only need to include the electricity
supplied to it from that date until 31st March 2013 in your total when
determining whether you are above the 6,000 MWh threshold.
Q How is
electricity that is generated using diesel now dealt with?
A Diesel
usage no longer has to be reported and CRC allowances will not have to be
bought to cover the emissions. Possibly
this was the case in previous years too, depending on whether or not the diesel
was on your Residual Measurement List (RML).
You may not be able to claim Electricity Generation Credits (EGCs) for
the final two years of this phase, even if they were claimed in previous years,
because a new EGC eligibility rule has been added: the electricity must be
generated without using a fuel that is or should be reported in the annual report
or that was included in the RML. In
other words, you will not be able to claim EGCs this year and next unless the
diesel was not on your RML. See section
4.3 of the EA's revised
Phase 1 guidance document (issued February 2013). EGCs go completely from Phase 2.
Q Will CRC auditors
expect to see participants following the new rules with immediate effect?
A The new
simplification changes do not yet have the force of law, although the CRC Order
2013 is anticipated to come into effect very soon and there is no realistic
chance that the changes won't affect reporting this summer. In the meantime, it would seem a little
unreasonable to expect participants to have got their records completely ready
for the changes that will apply from the 2012-13 annual report. But you will need to report according to the
new rules by the end of July so it would be as well to start gathering the
necessary information now (eg which gas and electricity meters can be excluded,
and which non-core ones that were not on your RML must be included). The auditor may expect you to have at least
made a start on working out how you will tackle this.
Q What is a
settled half-hourly meter and a dynamic supply?
A These
definitions are not changing. The
Environment Agency's revised Phase 1 Guidance contains a useful glossary. It defines the above terms as follows
(although the glossary provides additional information):
A [settled half-hourly] meter …
is able to measure electricity supplied at least every half hour and … enables
the supplier to comply with provisions of its licence to determine charges
between that supplier and another licence holder in respect of the transmission
and trading of wholesale electricity.
Dynamic supply is a technique for
calculating half hourly electricity supply where the supply is unmetered. These
data are used for settlement purposes and so, in CRC, are counted as a half
hourly meter (HHM) settled on the half hourly (HH) market.
Dynamic supply is often used for street lighting.
Q For an
organisation that has fallen below the qualification threshold, how do you
de-register for Phase 2?
A There is
no need to de-register. The CRC runs in
phases that are separate from each other.
If your organisation/group doesn’t qualify for Phase 2 based on its
April 2012 to March 2013 electricity consumption (through settled HHMs only),
then it's not necessary to do anything because your existing registration is
for Phase 1 only and will lapse at the end of this phase. Just don’t register for Phase 2.
Q How does
the 10% estimation uplift affect the 73,200 kWh threshold for gas meters - if a
gas supply is estimated at just under this threshold, must it be included as a
CRC supply on the basis that applying the uplift will take it above 73,200 kWh?
A A supply
of gas, for CRC purposes, must be measured by a "metering device",
and the draft CRC Order 2013 defines that as “a device which during a year of a
phase measures more than 73,200 kWh of gas supplied, in relation to the supply
of gas.” Therefore, it is at the very
least arguable that the meter must actually measure more than 73,200 kWh for
the supply to be a CRC supply. In any
case, it is only at the point that the supply is reported that an estimation
uplift is applied, meaning that there will be no uplift if the participant
decides that the supply is below the 73,200 kWh threshold and therefore does
not need to be reported. This point is
not specifically addressed in the EA's revised Phase 1 guidance. However, it may well have been considered by
the EA previously, because the definition of a large point gas meter that
applied in the first two years of the phase is very similar. We have raised a query with the EA to find
out if they agree with our view - which is that no uplift should be applied
when considering whether the 73,200 kWh figure is exceeded. Obviously, it would be best if you could
obtain at least two meter readings at least half a year apart, then the issue
does not arise.
Q When will
Carbon Counter be updated to reflect these simplification changes, and will information
entered ahead of the updating be lost?
A Work is
underway now to update Carbon Counter, in anticipation of the simplification
changes. Many of the changes will
require users to input additional information that is not currently held within
Carbon Counter, because it has not been required until now. For example, users will need to identify
which (if any) of their gas supplies are not used for heating, and which
electricity meters are Profile Class 01 or 02 (or serving domestic
accommodation in Northern Ireland). The
changes will not go live before the CRC Order 2013 becomes law but - assuming
that does not happen right at the last minute before the 31st July reporting
deadline - we are committed to updating Carbon Counter appropriately and in sufficient
time to allow customers to compile their annual reports. We know that Carbon Counter is viewed as an
essential compliance tool and many participants would struggle to gather,
handle and store the required data without it.
Please, don't wait until we have completed the necessary work before
inputting your 2012-13 data, particularly if you have a large number of
meters. Start now, because you will have
to go back into Carbon Counter to add the additional information before you are
in a position to report, and that may take some time. You need have no fear that the data will be
lost or overwritten, it is all stored safely within Carbon Counter.
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