It’s that time of year in the CRC calendar when participants need to think about purchasing allowances in the forecast sale. The forecast allowance window opens this April when participants can order allowances for the CRC year ending 2016 at a reduced cost, paying for the allowances in June 2015. Amendments have been made to the ‘Allocation of Allowances for Payment Regulations’ with the allowance prices set as follows:
- £16.10/tCO2 forecast sale price (order April 2015, pay for June 2015); and
- £16.90/tCO2 buy-to-comply price (order June/July 2016, pay for September 2016).
This represents a 50p/tCO2 (3%) increase on the prices set for the CRC year ended 2015. The amendments also preclude participants from using credit cards to purchase allowances.
To take advantage of the forecast sale, participants need to have a comprehensive understanding of their organisational energy use. However, they should be aware that if they do buy allowances this June, they may be liable for a purchase later in the year if they also need to purchase allowances for the CRC year ended 2015 in the buy-to-comply sale (for which allowances are ordered in June and paid for in September 2015). This could have a significant impact on some participants’ cash flows which should be factored into their decision-making.
As the differential between the two rates is small, this reduces the cost impact of any double purchase. However on the flip side, this means that the difference may not be sufficient to incentivise forecast purchasing. Either way, preparation for the Scheme is crucial and we recommend participants ensure they understand their Initial Phase energy supplies now to avoid the end-of-year reporting rush common in many organisations. This should include sending out requests to energy suppliers over the next month to ensure data is received in time to collate the Annual Report for the current CRC year.
Finally, although the First Phase of the CRC has now closed, participants should ensure they are satisfied with their reporting and are ready for potential scrutiny by the Scheme Regulator in the event that they are called for statutory audit. As well as being confident in the data reported, participants’ Evidence Packs should be complete and include records of appropriate internal sign-off.