Over four hundred firms under the Carbon Reduction Commitment (CRC) energy efficiency scheme are to be refunded some of the value of their purchased allowances after an administrative error meant they were overcharged.
The government scheme is designed to improve energy efficiency and cut carbon dioxide (CO2) emissions in private and public sector organisations that are high energy users. Those that qualify for the scheme must surrender one allowance for every tonne of CO2 they emit.
In the current phase of the scheme, participants have the option of buying allowances in advance in the cheaper ‘forecast sale’ at the start of a compliance year, or in a more expensive ‘compliance sale’ after the end of the year.
According to the Department of Energy and Climate Change (DECC), the 435 firms that purchased allowances in the April 2015 forecast sale were overcharged by 50p per allowance at a rate of £16.10. This was reportedly due to an administrative error after a retail price index (RPI) increase was applied which had not been included in the price for allowances in the April 2015 forecast sale in legislation.
This is despite the announcement made in 2012’s Autumn Statement that from 2015-16 onwards, the allowance price would increase in line with the RPI.
DECC is now working with its payment provider SSCL to contact participants who are owed a refund and will seek to provide details of the number of allowances bought and the total to be refunded. In order to process the payments, firms will be asked to confirm their bank details with SSCL or provide new information if these account details have changed.
The department aims to refund each firm with ten working days of receipt of the bank details into which the refund should be paid, although it will not refund bank charged incurred when making these payments.
The companies due to be refunded account for around a quarter of the 1,900 participants in the CRC scheme, with around £7 million to be distributed back to businesses.
The CRC allowance rates for 2015/16 were announced on 8 December 2014, with DECC only now rectifying the mistake. It is unclear why an incorrect forecast sale price was not corrected until months after both the forecast sale in April 2015, or why the original 2012 announcement was not legislated for.