What Are The Various Business Tariffs And What Happens To Them?
We have seen many instances in the U.K where new businesses have been created only to find that later when they are inspected by the energy regulator Ofgem, it turns out that the company is not following one of the various business tariffs that are necessary to comply. There can be many reasons for this. Some of them are based on the company’s failure to assess properly its impact on the environment. Another may be because it was unable to follow the regulations, particularly about obtaining a rating that provides accountability and a trading link. Yet another is simply that the energy regulator may have imposed a more restrictive rate than was necessary. It has become all too easy for a business owner to just underestimate the compliance costs.
The rates that are currently being charged by British Gas
for domestic customers is an example of this. The average annual rate is now above $3.50 per unit, with the rate expected to rise still further in the future. This means that if you are a business that sells or installs solar panels, a large-scale switch to using green energy is going to cost you an incredibly large sum of money. The tariffs, therefore, become a disincentive to change. But what tariffs do mean are likely to be subject to review in the months ahead as the government seeks to revise the regulatory framework in light of the global economic slowdown.
At the same time as the government
is considering changing the rates for gas, it is also examining whether or not to change the rate for electricity. This comes as the U.K. embarks on the biggest and most expensive clean energy investment program in its history. While the cost of renewable sources of energy such as wind and solar power has dropped dramatically over the last decade, the government is expected to introduce several new measures that will encourage investment in alternative energy. This is part of the way that it is hoping to meet its carbon reduction targets.
Tariffs are one of the major factors
that hinder the implementation of renewable energy schemes in the UK. However, with a renewed drive by the government to introduce a price on carbon emissions, this has become less important. The changes are likely to affect electricity tariffs, which are regulated by Ofgem, the Energy Performance Authority. These changes are due to come into force from next April and all homes and businesses will have to be fitted with an appropriate clean energy plan before they are eligible for a rate reduction. Recent research carried out by a think tank found that almost half of all tariff rises were implemented due to increases in fuel bills. These findings seem to contradict claims by ministers that the cost of living is going to increase to fuel the economic recovery.
The analysis by IP Climate showed that the changes
being brought about by the government could help boost the economy. The combination of tax changes and clean energy targets could help force energy companies to source more from green energy sources, which in turn could help create more jobs in Britain. However, the main worry for business owners is likely to be the impact of the measures on their annual tariffs.
The tariffs may also be affected by the increasing use of electricity
from home appliances such as electric stoves, refrigerators, and washing machines. The increased demand for these items has been forecasted to increase by up to 25% over the next five years, but this could affect the electricity rate. A recent study found that some homeowners were reducing the amount they paid for their electricity, as they replaced old equipment with more efficient energy-efficient items. The tariffs are likely to rise as a result of these changes, but it is hoped that future rises will be more balanced with a drop in prices.