CRC in the UK Hotels Sector
This post was written by Siobhan Hayes, Indeg Kerr and Tim Foster.
In earlier postings we have introduced the UK’s Carbon Reduction Commitment Energy Efficiency Scheme(CRC). This posting is a brief look at how the hotels sector will be affected by the CRC.
Since the test for whether or not a business falls inside or outside the CRC depends on the 2008 electricity consumption it is likely that many hotel businesses (which traditionally consume a lot of power) will have to comply with CRC.
The first thing they will have to determine is their group structure on 31 December 2008 and decide whether or not the parent company will take responsibility for compliance or whether this will be done by one of the group’s UK companies. Some hotel groups may be able to identify separate subsidiaries who will participate in the CRC by themselves. These are “significant group undertakings” who consumed sufficient electricity in 2008 to qualify by themselves (as long as this does not take the rest of the CRC group below the threshold for qualification.
The next thing to establish is what half hourly electricity meters the group had in 2008 that were settled on the half hourly market and whether or not more than 6,000 MWh were consumed by the group in the UK in the calendar year of 2008. There is little doubt that substantial chains of hotels will easily exceed this target and will be subject to full CRC compliance. But there are complications which depend on the structure of the hotel business in question.
For hotels run under Hotel Management Agreements (HMAs) the vital question will be who is responsible for the total half hourly metered electricity supplies of at least 6,000 MWh. Almost always this will be the hotel operator in our experience of HMAs and the operator will need to consolidate all of its UK business energy consumption figures for the CRC Scheme year starting in April 2010 and comply with all the reporting requirements etc.
Hotels operating under franchise agreements where the franchisor specifies how premises are to be used and equipped will be subject to compliance via their franchisor. This will apply even though the franchisee signed the electricity supply agreement. Franchisees obligations under the CRC are to provide information to franchisors who will have the compliance burden but franchisees will face penalties if they fail to comply.
For hotels which are leased, the important question will be whether the landlord or the tenant was responsible for the electricity supply agreement in 2008 to determine whether or not liability falls on landlord or tenant for compliance of the first phase of the CRC. Where the hotel is in a stand alone building this will often be the tenant.
If you think the CRC applies to you in some ways or even in a variety of ways because you have a diverse business, please do read through our other blog postings to discover what you need to do to comply.
Note:
The regulations to implement the CRC remain in draft form but this posting reflects the UK Government’s decision, Published on 8 October 2009, resulting from the final stage of the consultation on the new law.
