Council may still be hit by green tax

6 September 2000
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07 September 2000 | Liam O'Brien

Local authorities are being warned over arranging so-called "green" energy deals that may not enable them to avoid the upcoming climate change levy.

The warning follows a potentially abortive attempt by Rotherham Metropolitan Borough Council to escape the levy by purchasing what it believes is renewable fuel.

The council announced at the end of August that it had signed a contract with Yorkshire Electricity for green power, mostly from combined heat and power (CHP) but also from solar sources, to power its buildings. The move is intended to side-step an expected bill of £204,000 for the levy.

Rotherham's energy manager, Lawrie O'Connor, acknowledged that the council will be paying £137,000 more for the "green" energy compared with normal electricity.

"We will avoid the levy completely on all electricity bills," he said. "Between 1 November and 31 March 2001, our electricity bills will rise by between £90,000 and £100,000. But from April onwards, we will save around £67,000 a year through avoiding the levy."

A spokesman for Yorkshire Electricity said: "We are not sure yet that the scheme will secure exemption, but this should be clearer later on this year when the government announces its plans in more detail."

A government announcement in October is expected to confirm that only organisations that are linked directly to renewable energy generators will escape the levy. Because the green energy is supplied indirectly to Rotherham via the national grid, and will be a mix of green and mostly non-renewable power, it will not secure exemption for the Yorkshire council.

Allan Jones, energy services manager at Woking Borough Council, said many councils were being "deluded" by green energy schemes.

Woking claims to be the only local authority in the UK with a CHP plant, which guarantees the council an exemption on the levy because the plant is a direct supply of renewable energy.

"I think Rotherham has misinterpreted the exemption," said Jones, a member of the General Working Party for Embedded Energy, which advises the government on renewable power.

"You can't notionally buy green energy from the national grid. The only way to avoid the climate change levy is by having a direct supply of renewable energy."

Ian Dobson, chairman of the CIPS energy committee, predicted that Rotherham could "catch a cold", and have to pay more for its electricity while remaining liable for the levy.

SMsep2000

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