Companies are not prepared for the new SECR tax, reports Herpreet Kaur Grewal.
09 January 2019 | Herpreet Kaur Grewal
The Streamlined Energy and Carbon Reporting regulations (SECR) tax comes into effect in April, but thousands of companies have not heard of it, the chief executive of the Energy Managers Association (EMA) told attendees of the Energy Management Exhibition (Emex) conference at the end of last year.
Lord Rupert Redesdale said: "What I find funny is that this is going to affect 10,000 companies starting in April and hardly anybody has heard of it."
He outlined the EMA's toolkit, which operates with a four-step approach including data collection, auditing, board sign-off and presentation in the annual report [of the company].
Redesdale added that having to include the information in annual reports would mean that energy efficiency would be more integrated into a company's operations and energy managers or facilities managers would not need to convince the board separately on these matters.
The SECR will replace the Carbon Reduction Commitment (CRC), a mandatory carbon emissions reporting and pricing scheme to cover large public and private sector organisations in the UK that use more than 6,000 megawatt hours a year of electricity.
However, the SECR will apply to all large companies, up to 11,000 in number and firms with more than 30 employees, which have an annual turnover of £36 million and a balance sheet greater than £18 million.
The only exclusions for organisations meeting these criteria are for those with very low energy consumption of fewer than 40,000-kilowatt hours a year. There are no exemptions or exclusions for companies holding Climate Change Agreements (CCA) or participating in EU ETS.
The original plans for SECR were published in July, and more detail was added in the recent Budget. Further draft guidelines were published in November, with a full set due early next year.
Brexit in the way
Sebastian Gray, director of energy management consultancy 2EA, said he agreed with Lord Redesdale.
"Most companies either are not ready, aware or understand SECR and what it entails," he told Facilitate. "I think there are several reasons. Firstly, because of that one magical word - Brexit. Companies are so wrapped up in preparing for the unknown that things like the SECR slip through the net. Even though this and other industry regulations are Brexit-proof due to being enshrined in UK law. Some companies always believe there's a chance it will not happen. A good example is many that believed ESOS would not see phase 2 and here it is - one year left.
"Secondly, it's still in the planning & consultation stage. There has yet to be an official publication on it. We have had consultations, government response and recently a further consultation. Most I've attended," added Gray.
"But without definitive guidance, things can be subject to change and it wouldn't surprise me if companies are waiting for the final guidance.
"Like ESOS and the new CCL rates rise hitting non-domestic energy bills in April 2019, as energy professionals, it is our duty to inform our clients and organisations about this upcoming reporting regulation and to guide them through it.
"I can't stress enough that energy is taking a more prominent role within day-to-day business. Energy is not a fixed cost. It can be reduced. It can be managed. Streamlined Energy & Carbon Reporting is another step in that direction."