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CRC Energy Efficiency Scheme: final version of CRC Order and new EA guidance published
Practical Law UK Legal Update 9-501-8260 (Approx. 5 pages)
CRC Energy Efficiency Scheme: final version of CRC Order and new EA guidance published
by PLC Environment
| Published on 26 Mar 2010 • UK |
An update on the publication, on 24-25 March 2010, of the final version of the CRC Energy Efficiency Scheme Order 2010, revised versions of the Environment Agency guidance notes on qualification and registration and a number of new Environment Agency guidance notes on the CRC.
Speedread
On 24 March 2010, the Environment Agency (EA) published revised versions of its guidance on qualification and registration guidance under CRC Energy Efficiency Scheme (CRC) and a series of new CRC guidance notes.
On 25 March 2010, the final version of the CRC Energy Efficiency Scheme Order 2010 (SI 2010/768) was published on the Office of Public Sector Information (OPSI) website.
The CRC will come into operation on 1 April 2010, as expected. Organisations that meet the relevant qualification criteria will need to register as participants by 30 September 2010. Failure to meet this deadline can result in civil fines.
If a parent company wishes to disaggregate any of its large subsidiaries (referred to as "Significant Group Undertakings" (SGUs)), it will have to register (and apply for the disaggregation at the same time) by 30 June 2010. The financial implications of missing this deadline could be significant, as SGUs that have not been disaggregated in time will be treated as part of the parent company's wider group for the purposes of Phase 1 of the scheme. This means the parent company will be responsible for reporting on emissions, and buying allowances, for those SGUs.
The CRC Order
Terms that appear in capital letters in this note are defined in Practice note, CRC Energy Efficiency Scheme: PLC glossary and abbreviations.
The CRC Energy Efficiency Scheme Order 2010 (SI 2010/768) (the CRC Order) was published on the Office of Public Sector Information (OPSI) website on 25 March 2010. The CRC Order is accompanied by an explanatory memorandum. There have been no changes to the Order from the version that was laid before Parliament on 19 January 2010.
As expected, the CRC Energy Efficiency Scheme (CRC) will come into operation on 1 April 2010.
Organisations that meet the Qualification Criteria will have to register as Participants in the scheme by 30 September 2010. Failure to meet this deadline can result in civil fines (see Practice note, CRC Energy Efficiency Scheme: enforcement and penalties).
If an organisation meets the first limb of the Qualification Criteria but not the second limb (that is, it has a Settled HHM but did not consume more than 6,000 MWh of half hourly electricity through all of its HHMs during the Qualification Year), it may still have to make an Information Disclosure.
If an organisation wishes to disaggregate a Significant Group Undertaking (SGU), it must apply to do so (as part of the registration process) by 30 June 2010. If an application for disaggregation has not been made by this deadline, the SGU in question will have to participate as part of the wider Group. This means that the Highest Parent Undertaking in the Group will be responsible for reporting on, and buying Allowances for, that SGU's emissions. Therefore, the financial implications of missing the 30 June deadline could be significant for Groups that are planning to disaggregate several SGUs.
New and revised Environment Agency guidance
On 24 March 2010, the Environment Agency (EA) published revised versions of its guidance on qualification and registration. The guidance, which was first published in November 2009, has been revised to reflect the final CRC Order. The main changes and clarifications are explained on the EA's website. The changes and clarifications are as follows:
- Public bodies cannot have SGUs.
- Organisations that are required to make an Information Disclosure and that have a supply of Qualifying Electricity of over 3,000 MWh need to declare their total supplies of Qualifying Electricity but not their supplies that are excluded under the provisions in Schedule 1 to the CRC Order. These organisations (described as "declarers") will need to calculate their excluded supplies and include this information in their Evidence Pack so that they are able to demonstrate that they fall below the 6,000 MWh Qualifying Amount.
- Organisations that were going to have to make an Information Disclosure or that were not otherwise required to participate in the CRC based on their group structure and electricity supplies in the Qualification Year, but which, as a result of buying another organisation that is required to participate in the CRC or is an SGU of another organisation that has to register, will need to include the electricity supplies for the whole Group when they register although, they will only have to buy Allowances in relation to the Participant or SGU that they have acquired.
- All organisations involved in a Designated Change must inform the Administrator within three months.
- Facilities management companies will still have to participate in the CRC if they meet the Qualification Criteria based on their own electricity supplies, even if they pass on other energy supplies to their customers. (The supplies that are passed on to their customers are known as "unconsumed supplies".)
- Overseas companies with operations in the UK, but without a registered UK business address or UK parent company, need to contact the EA before registering in order to obtain a UK address.
- Some changes have been made to terminology. The terms "direct supply" and "indirect supply" are no longer included in the guidance. The term "fiscal meter" has been replaced by the term "meter used for measuring electricity or gas for charging purposes". This change reflects more closely the wording in the CRC Order but may have the effect of increasing the number of situations when an organisation will be responsible for an energy supply.
- The following definitions have been added to the EA glossary: daily gas meter, declarer hourly gas meter, large gas point meter, CTS equivalent, General CCA exemption, Member CCA exemption and MPRN.
The EA also published 11 new CRC guidance documents on its website:
- Guidance on the CRC Energy Efficiency Scheme - Changes to organisational structure – private sector. This document explains how any change in a private sector organisation will affect its reporting obligations under the CRC.
- Guidance on the CRC Energy Efficiency Scheme - Changes to organisational structure – public sector. This document explains how any change in a public sector organisation will affect its reporting obligations under the CRC.
- Guidance on the CRC Energy Efficiency Scheme - Evidence pack. This document explains how Participants should set up and maintain an Evidence Pack, including what documents, data and records they will need to keep in respect of their organisation.
- Guidance on the CRC Energy Efficiency Scheme - Meters and metering. This document explains the different types of meters and how to collect the required data from them.
- Guidance on the CRC Energy Efficiency Scheme - Supply rules. This document helps organisations determine if they need to register as a Participant, or if they need to make an Information Disclosure.
- Guidance on the CRC Energy Efficiency Scheme - Estimation techniques. This document explains when an energy supply must be considered as an estimate (that is, when the 10% estimation uplift will apply under the CRC).
- Guidance on the CRC Energy Efficiency Scheme - Conversion factors and emission factors. This document gives details of how Participants should use conversion and emission factors in meeting their reporting obligations under the CRC.
- Guidance on the CRC Energy Efficiency Scheme - EU Emissions Trading System (EU ETS) and Climate Change Agreements (CCAs). This document explains how emissions that are already regulated as part of a CCA or the EU ETS will be treated under the CRC.
- Guidance on the CRC Energy Efficiency Scheme - Electricity generation. This document explains how the primary input fuel, generated electricity and heat, and onward supply is accounted for in the CRC.
In addition, the EA also published a "Source list" tool, which is a spreadsheet designed to help Participants with the management of energy data under the CRC.
Further information
For more information on the CRC, see the CRC Survival Kit.
To view a list of new CRC materials PLC is planning to publish shortly, see CRC Energy Efficiency Scheme: Provisional Publishing Schedule.