Nuclear levy will increase energy bills from December

From next month, all energy bills will include the “nuclear levy”, a charge used by the Government to fund nuclear infrastructure. It is expected to add up to around £100 a year for small businesses, but this will vary with their energy usage.

The Energy Gyst has created a breakdown of costs and explains that it will depend upon the size, nature and energy usage of a business. A barber or hairdresser using 40,000 kWh annually will pay around £140 in levy while a supermarket using 1,130,000  kWh will pay £3,904.

What is the nuclear levy?

The charge comes under the Regulated Asset Base (RAB) model, which gathers revenue so that the construction, financing, and operational costs of new infrastructure can be covered. It is part of the Government’s bid to move away from carbon energy.

It is compulsory though businesses with an Energy Intensive Industries (EII) exemption or off-grid properties are exempt. Les Roberts, business energy expert at Bionic, told Energy Gyst, “most high street shops, cafes, offices, or small warehouses, will see only a modest increase in their electricity bills because the charge is linked to energy use.

“However, larger businesses with higher consumption, such as supermarkets or manufacturers, will face a proportionally higher RAB cost – the more electricity you use, the higher the charge.”

Plan ahead

Businesses should factor the levy into their budgeting; not least because many businesses are already groaning under the weight of energy costs; and don’t need any nasty surprises. They should also monitor updates from their energy providers as to the details of the levy roll-out.

The Energy Advice Hub suggests that businesses look out for the forecasts of the main charge – the Interim Levy Rate (ILR) and Total Reserve Amount (TRA). This will give an indication of whether the levy could go up or down; and the bill from energy suppliers will be based on this.

As this cost is non-negotiable, businesses just need to plan ahead to absorb it; but it comes at a time when many SMEs are shouting for help with energy costs already; and are just hoping that this is something the Chancellor may deliver with the Autumn Budget.