Heavy industry calls for 90% network discounts

Heavy industries have called for near total relief from network charges under the government’s Supercharger scheme.

In its election manifesto, the Energy Intensive User Group (EIUG) has called for the ‘British Industry Supercharger’ package to be enhanced.

Under the government’s proposed supercharger scheme – announced in April – electricity suppliers will fund a 60% discount on the Transmission Network Use of System, Distribution Use of System and Balancing System Use of System charges.

The scheme, due to be come into force next year, is designed to help bring the electricity bills of energy intensive industries (EIIs), like chemicals and steel, more closely into line with their competitors in other European countries.

But the manifesto of the EIUG, which represents businesses in these industries, says differences in electricity costs remain too large under the Supercharger and calls for the discounts on network charges offered through the scheme to be increased from 60% to 90%.

It says: “A substantial price differential will still remain, mainly due to other countries in Europe having special network charging arrangement for their most electricity-intensive industries that provide close to full relief from these charges.”

The manifesto also urges the government to further explore proposals to split up the wholesale electricity market by creating a green power pool.

The concept of a green power pool, which was rejected by the government following the first round of consultation on its review of electricity market arrangements (REMA), would support the competitiveness of the UK’s energy intensive industries (EIIs) by improving their access to wholesale electricity prices from cheaper renewables.

However, the EIUG opposes any moves by future government to shift policy costs from electricity to gas bills.

It says such rebalancing of policy costs and any new gas levies “risk undermining” the competitiveness of more gas-intensive industries.

The EIUG also calls for reforms to the network connection process, which it describes as an “increasingly…. significant barrier” to EIIs wanting to decarbonise.

And the manifesto urges consistency between the carbon taxes being developed by the EU and the UK, which it says could unlock private investment decisions currently on hold due to the policy uncertainty surrounding potentially different approaches to this issue in the two jurisdictions.

Arjan Geveke, director of the EIUG, said: “The political parties should recognise the crucial role energy intensive industries play in achieving net zero, in their local economy and for employment. Relative higher GB industrial electricity prices and risk of carbon leakage have deterred the private investment needed for these industries to decarbonise and compete internationally. The proposals in the manifesto will go a long way to address these and for EIIs to thrive in a low carbon economy”.