The Energy Intensive Industries Support Levy – how will it affect businesses?

The Energy Intensive Industries Support Levy (ESL) is a charge that electricity suppliers are required to pay from April 2025.

The levy has been introduced to fund the Network Charging Compensation scheme (NCC) which is one of the government initiatives under the wider British Industry Supercharger scheme. The NCC is aimed at supporting industries that consume significant amounts of energy. These industries include sectors like steel, cement, chemicals which are critical to the economy, but face substantial challenges due to high energy costs in the UK, especially when competing in international markets. The NCC scheme will offer eligible Energy Intensive Industries (EIIs) a 60% discount on their network charging costs, namely Distribution charges (DUoS), Transmission charges (TNUoS) and Balancing services charges (BSUoS). For customers not eligible for the discount, suppliers will pass the levy costs on, starting from April 1, 2025.

The primary objective of the ESL is to cover the cost of offsetting some of the network charging costs for eligible EEI businesses, with a ‘back-dated’ start date of April 2024. This is intended to help the UK EIIs to maintain their competitiveness in the global market, especially with companies in countries with lower energy costs or less stringent environmental regulations. By providing this financial relief, the levy also indirectly helps to reduce the risk of “carbon leakage,” where businesses relocate to regions with fewer restrictions, potentially increasing global carbon emissions.

Elexon has been appointed as the administrator to manage the NCC scheme. From April 2025, electricity suppliers will be charged the EII Support Levy monthly, at a level which is based on their market share. After collecting funds from suppliers, Elexon will start the compensation payments to eligible EIIs from May 2025. Because the scheme is ‘back-dated’ to April 2024, it’s important to note both the supplier invoices in April 2025 and EII compensation payments in May 2025, will be related to the April 2024 claim month. Payments to EIIs will continue to be made monthly, 13 months in arrears.

• Non-EII customers flex: If you are a non-EII customer with a passthrough contract, you will see an additional charged relating to the ESL in your bills from April 2025 onwards. In April 2025 you will start to be charged our best view ESL for each month and will be reconciled for that consumption period after 13 months, starting in May 2026. Despite the NCC scheme starting in April 2024, due to the lack of details and uncertainty around the level of ESL, we have not been charging you the cost of ESL. After we started receiving the invoices from Elexon for the period from April 2024 onwards, we will inform you separately before we start billing for that period (i.e April 2024 to March 2025).

• Non-EII customers fixed: If you are a non-EII customer with a fixed contract (eg: Fixed All Inclusive – Electricity, Fixed All Inclusive – Electricity-SME), this new cost is already included within your unit price, hence you will not have any further impact.

• EII customers: If you are an EII customer, it is likely that you are already aware of the NCC scheme and have already started submitting your claims to Elexon. If not, you should contact your Business Development Manager at SEUK. As an EII customer, you will be exempted from ESL charges (subject to your exemption % in the certificate).

More information can be found on the Elexon website.

View our online content disclaimer.