The Climate Change Levy (General) Regulations 2001

• (a) when each relevant supply of electricity is treated as taking place and the recipient of each such supply;

• (b) the CHP LEC (if any) relating to that electricity and, if different from the recipient, the identity of any person to whom entitlement to the CHP LEC is transferred;

• (c) the date (or dates) on which each other event to which it relates occurs;

• (d) the date on which each entry to the record is made.

6

That record must be kept for 6 years starting from each reconciliation day to which it is relevant (see paragraphs 10 and 13(3)).

7

Subject to paragraph 6, that record must be made available on request and at any reasonable time to a person authorised by–

• (a) the Secretary of State, or

• (b) the relevant Authority.

8

• (1) This paragraph only applies whilst the relevant Authority has information on the basis of which it reasonably believes that the person mentioned in paragraph 2 is not fully complying with the CHP outputs record requirements in paragraphs 2 to 7.

• (2) The relevant Authority must refuse to certify or issue any CHP LEC in relation to electricity produced in the station (see regulations 51B(1) and 51B(8)).

• (3) The relevant Authority must also restrict the validity of any relevant and as yet unrestricted CHP LEC to indirect supplies, in which case the relevant Authority must as soon as practicable notify that restriction to the person to whom it was issued (see regulation 51B(8)).

• A CHP LEC is relevant for this purpose if it has not been reconciled in accordance with this Schedule (see paragraph 13(1)).

Reconciliation of outputs

9

For the purposes of the following paragraphs, regard a completed calendar year as one for which 31 December is passed and an incompleted calendar year as one for which 31 December is not passed.

10

• (1) The reconciliation day for a completed calendar year is the earlier of–

• (a) the first day of the month in the subsequent calendar year in which regulation 3(2) of the Climate Change Levy (Combined Heat and Power Stations) Exemption Certificate Regulations 2001 is met in relation to the station (current CHPQA certificate sent to Secretary of State by 30 June);

• (b) the day in the subsequent calendar year on which revocation of the current exemption certificate takes effect pursuant to regulation 4(2) of those Regulations (station ceases to operate, current CHPQA certificate not sent to Secretary of State by 30 June, or relevant written request to Secretary of State).

• The “reconciliation span” relating to this reconciliation day spans 1 January in the completed calendar year to the day before the reconciliation day, inclusive.

• (2) A reconciliation day for an incompleted calendar year is any day in that incompleted calendar year on which revocation of the current exemption certificate takes effect pursuant to regulation 4(2) of those Regulations.

• The “reconciliation span” relating to any such reconciliation day spans 1 January in that calendar year to the day before that reconciliation day, inclusive.

• (3) The relevant Authority shall act in accordance with paragraph 11 no later than the 90th day following a reconciliation day, subject as appropriate to regulations 51C and 51D (relevant Authority neither certifying electricity nor issuing CHP LEC, or relevant Authority dealing with incorrect certification).

• (4) A reconciliation day in paragraph (2) may arise irrespective of any overlap between the reconciliation span in that paragraph with the reconciliation span in paragraph (1).

11

• (1) The relevant Authority shall determine whether insufficient or excessive CHP LECs have been issued and remain unrestricted as respects each reconciliation span, having proper regard to the difference between–

• (a) the quantity of QPO electricity actually produced in the station during that reconciliation span, and

• (b) the quantity of QPO electricity represented by the CHP LECs issued as respects electricity produced in the station during that reconciliation span and remaining unrestricted.

• (2) If the relevant Authority determines that insufficient CHP LECs have been issued and remain unrestricted as respects a reconciliation span, it must–

• (a) to the extent of that insufficiency, and

• (b) as respects that reconciliation span,

issue additional CHP LECs (see regulation 51B(8)) as respects the QPO electricity outputs of the station.

• Any such CHP LEC must, within 60 days of issue, be allocated by the person referred to in paragraph 2 to relevant and appropriate supplies identified in the record as taking place in that reconciliation span.

• (3) If the relevant Authority determines that excessive CHP LECs have been issued and remain unrestricted as respects a reconciliation span, it must act in accordance with paragraphs (4) and (5), as appropriate (but this is subject to sub-paragraphs (9) and (10)).

• (4) If the reconciliation day arises because regulation 3(2) of the Climate Change Levy (Combined Heat and Power Stations) Exemption Certificate Regulations 2001 is met (see paragraph 10(1)(a)), the relevant Authority must treat the excess CHP LECs as being prospectively referable to figures made known to it by the operator for the purposes of regulation 51B(2) as respects production in the station after the relevant reconciliation day.

• (5) If the relevant reconciliation day arises because the exemption certificate is revoked (see paragraph 10(1)(b)), the relevant Authority must restrict the validity of any excess CHP LECs to indirect supplies, in which case it must as soon as practicable notify that restriction to the person to whom the CHP LEC in question was issued or to any person appearing to control the station (see regulation 51B(8)).

• The relevant Authority must ensure that those CHP LECs remaining unrestricted afterwards (and not yet reconciled, see paragraph 13(1)) collectively represent QPO electricity produced in the station during the reconciliation span.

• (6) For the purposes of this paragraph, the relevant Authority must regard calendar year 2003 as beginning on 1 April 2003.

• (7) For the purposes of regulation 51B(6) (QPO electricity referable to calendar year), the relevant Authority must not regard electricity referable to before 1 April 2003 as QPO electricity

• (8) 8 In the case of electricity and a station to which this paragraph applied before 22nd July 2005 but not after 21st July 2005 (see regulation 51A(2)), the relevant Authority must treat 22nd July 2005 as a reconciliation day for an incompleted calendar year running from 1st January to 21st July 2005 inclusive (the “reconciliation span”).

The determination in sub-paragraph (1) must be made on the basis that a partly exempt station’s annual limit for that incompleted calendar year is the former limit multiplied by the fraction with a numerator of 202 and a denominator of 365.

For these purposes, the “former limit” is the one in force on 1st January 2005 under regulation 5(2) of the Climate Change Levy (Combined Heat and Power Stations) Prescribed Conditions and Efficiency Percentages Regulations 2001.

• (9) Sub-paragraph (10) applies where a reconciliation span relating to a reconciliation day spans 1st January 2012 to the day before a reconciliation day that falls in the calendar year 2013.

• (10) Where this sub-paragraph applies—

• (a) sub-paragraphs (4) and (5) do not apply; and

• (b) the relevant Authority need not take any action in respect of the excessive CHP LECs that have been issued and remain unrestricted.

Monitoring and balancing obligation

12

• (1) The CHP outputs record must never show or indicate as respects a reconciliation span–

• (a) a deficit of unrestricted CHP LECs in relation to the total quantity of QPO electricity identified in the record pursuant to paragraph 3(2)(a) and 3(2)(b) (self-supplies and supplies to consumers);

• (b) a deficit of unrestricted plus restricted CHP LECs in relation to the total quantity of QPO electricity identified pursuant to paragraph 3(2)(a), 3(2)(b) and 3(2)(c) (self-supplies, supplies to consumers and supplies to others).

• (2) Each deficit representing 1 MWh shall be regarded as a separate breach of this paragraph for the purposes of regulation 60(1)(hb) (penalties).

• (3) Paragraph (1) has effect subject to paragraphs 3(4), 3(5), 11(2) and 11(5).

• (4) Paragraph (1) continues to apply after a CHP LEC is reconciled (see paragraph 13(1)).

Interpretation

13

• (1) A CHP LEC is “reconciled” for the purposes of this Schedule only if–

• (a) it is the subject of a reconciliation span in relation to which the relevant Authority has performed its functions under paragraph 10(3), and

• (b) it is allocated, if required, in accordance with paragraph 11(2).

• (2) A CHP LEC the validity of which is restricted under paragraph 8(3) or 11(5) may be regarded as a restricted CHP LEC for the purposes of regulations 51I to 51M.

• (3) The CHP outputs record is relevant to a reconciliation day to the extent that it records (or is required to record) events taking place during the reconciliation span relating to that reconciliation day (see paragraphs 6, 10(1) and 10(2)).

• (4) See also regulation 51A.

Compulsory updates, corrections and payment of CCL due, exemption from CCL registration

Tax credit for recipient and reconciliation for input fuel to combined heat and power stations

9A

Paragraphs 5 to 9 apply subject to the modifications in paragraph 9C, but those modifications are only relevant to the extent that the recipient’s relief percentage is determined on the basis of a quantity of taxable commodity referable to paragraph 15 of the Act (supplies to combined heat and power stations).

9B

• (1) For the purposes of the following sub-paragraphs, regard a completed calendar year as one for which 31st December is passed and an incompleted calendar year as one for which 31st December is not passed.

• (2) The reconciliation day for a completed calendar year is the earlier of—

• (a) the first day of the month in the subsequent calendar year in which regulation 3(2) of the Climate Change Levy (Combined Heat and Power Stations) Exemption Certificate Regulations 2001 is met in relation to the station in question (current CHPQA certificate sent to Secretary of State by 30th June);

• (b) the 60th day after any day in the subsequent calendar year on which the station’s exemption certificate is revoked pursuant to regulation 4(2) of those Regulations (station ceases to operate, current CHPQA certificate not sent to Secretary of State by 30th June, or relevant written request to Secretary of State).

The “reconciliation span” relating to this reconciliation day is the completed calendar year.

• (3) A reconciliation day for an incompleted calendar year is the 60th day after any day in that incompleted calendar year on which the station’s exemption certificate is revoked pursuant to regulation 4(2) of those Regulations.

The “reconciliation span” relating to any such reconciliation day spans 1st January in that calendar year to the day before that reconciliation day, inclusive.

9C

• (1) The recipient must review the correctness of the supplier certificate no later than a reconciliation day in paragraph 9B.

This review is only in relation to that part of the recipient’s relief percentage that is determined on the basis mentioned in paragraph 9A (taxable commodities supplied to combined heat and power stations).

• (2) That correctness must be reviewed in relation to the efficiency percentage determined for the relevant reconciliation span (for determination of efficiency percentage, see regulations 3(2) and 6(2) of the Climate Change Levy (Combined Heat and Power Stations) Regulations 2005).

In the case of a reconciliation span for an incompleted calendar year, treat the actual efficiency percentage as one determined for the 12 month period preceding the relevant reconciliation day and as if that period was an Annual Operation (for Annual Operation, see regulation 51B(6)), but as zero for any time the exemption certificate stands revoked.

• (3) The review must properly take into account—

• (a) each quantity of taxable commodity supplied on the basis of the supplier certificate or certificates in question and not previously the subject of a review under this paragraph, and

• (b) the actual efficiency percentage for the station in question at the time or times when that taxable commodity is supplied.

• (4) Sub-paragraph (5) or (6) applies if the review demonstrates that the supplier certificate was incorrect as respects the taxable commodity referable to paragraph 15 of the Act (supplies to combined heat and power stations).

• (5) If the CCL relief percentage applied was too low, the recipient may act in accordance with paragraphs 6 to 9 (recipient’s tax credit for supply incorrectly made on basis of its being a taxable supply) (but only in relation to the taxable commodity referable to paragraph 15 of the Act – supplies to combined heat and power stations).

After 21st July 2005, and irrespective of when the supplies in question were made or other relevant events occurred, paragraph 5(5) does not apply where this paragraph applies.

• (6) If the CCL relief percentage applied was too high, paragraphs 5(7) to 5(9F) apply accordingly (deemed taxable self supplies, exemption from registration, payment of CCL due, etc).

• (7) This paragraph only applies to supplies made after 31st December 2004, but not to those supplies in relation to which corresponding arrangements have been initiated or made before 22nd July 2005.

Corresponding arrangements are only—

• (a) claims by the recipient for tax credits or similar repayments, or

• (b) steps taken by the recipient to correct the position following a review demonstrating that a CCL relief percentage was too high (delivery of updated supplier certificate such that error corrected in one year, adjustment in CCL return, payment to Commissioners – see paragraph 5(6) as in force before 22nd July 2005).

Miscellaneous

16

A supplier certificate ceases to be valid for the purposes of regulation 34, 35 or 36 on the 5th anniversary of its implementation date (about which, see regulation 37(6)).

2A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special rules for excluded, exempt ... ... and reduced-rate supplies

Special rules for excluded, exempt ... , recycling lower-rate supplies and reduced-rate supplies

40A

A quantity of a commodity is not to be the subject of a deemed supply under paragraph 24A of the Act (deemed taxable supplies of commodities to be used in producing electricity) so far as it is the subject of a taxable supply as provided for by regulation 40(2) in its application for the purposes of paragraph 14(1) of the Act.

Input fuels referable to the production of electricity in combined heat and power stations

51N

Schedule 3 has effect for the purpose of determining the extent to which a quantity of a carbon price support rate commodity is referable to the production of electricity in a combined heat and power station.

SCHEDULE 3 — FUELS REFERABLE TO THE PRODUCTION OF ELECTRICITY IN A COMBINED HEAT AND POWER STATION

Interpretation

1

In this Schedule—

• “Annual Operation” means a period commencing on 1st January and finishing on 31st December;

• ...

• “CHP Qualifying Heat Output” “CHP Qualifying Power Output” “CHP scheme” ... “CHP Total Fuel Input” and “CHP Total Power Output” have the meaning given in section 4 of the CHPQA;

Calculation of fuels referable to the production of electricity

2

• (1) The extent to which a quantity of a carbon price support rate commodity is referable to the production of electricity in a combined heat and power station is to be determined in accordance with sub-paragraphs (2) (3) and (4).

• (2) Calculate the total quantity of input fuels referable to the production of electricity in accordance with the following formula—

$$(TFI−QHOηh,ref)x(1−MOTPO)$Where—TFIis the CHP Total Fuel Input for the station specified on the current CHPQA certificate relating to the station at the time the quantity of the carbon price support rate commodity is brought onto, or arrives at, the CHPQA site.QHO is the CHP Qualifying Heat Output for the station specified on the current CHPQA certificate relating to the station at the time the quantity of the carbon price support rate commodity is brought onto, or arrives at, the CHPQA site.ηh,refis the reference boiler heat efficiency, taken here to be 81%.MO is Mechanical Output, which is the amount of energy in megawatt-hours (electrical) (MWhe) generated by the station in a given annual operation that is used to drive a mechanical load (such as a pump, fan or compressor) through direct coupling, without the use of electricity.TPO is the CHP Total Power Output for the station on the current CHPQA certificate relating to the station at the time the quantity of the carbon price support rate commodity is brought onto, or arrives at, the CHPQA site.$

• (2A) Sub-paragraphs (2B) to (2E) apply, instead of sub-paragraphs (3) and (4), in relation to carbon price support rate commodities brought onto, or arriving at, a CHPQA site on or after 1st April 2015.

• (2B) The extent to which a quantity of a carbon price support rate commodity is referable to the production of non-qualifying electricity in a combined heat and power station is to be determined in accordance with sub-paragraphs (2C) to (2E).

• (2C) Calculate the total quantity of input fuels referable to the production of non-qualifying electricity in accordance with the following formula—

$$Q×(1−ESTPO−MO)$Where—Q is the quantity of input fuels referable to the production of electricity calculated in accordance with sub-paragraph (2);ES (which must not exceed the QPO) is the amount of qualifying electricity in MWh generated by the station in the annual operation to which the current CHPQA certificate relating to the station applies at the time the quantity of carbon price support rate commodity is brought onto, or arrives at, the CHPQA site;QPO is the CHP Qualifying Power Output for the station specified on the current CHPQA certificate relating to the station at the time the quantity of carbon price support rate commodity is brought onto, or arrives at, the CHPQA site;TPO and MO have the meaning given in sub-paragraph (2).$

• (2D) Calculate the percentage of input fuels referable to the production of non-qualifying electricity in accordance with the following formula—

$$(RTFI)×100$Where—R is the quantity of input fuels referable to the production of non-qualifying electricity calculated in accordance with sub-paragraph (2C);TFI has the meaning given in sub-paragraph (2).$

• (2E) Apply the percentage calculated in accordance with sub-paragraph (2D) to the quantity of carbon price support rate commodities brought onto, or arriving at, the CHPQA site.

• (3) Calculate the percentage of input fuels referable to the production of electricity in accordance with the following formula—

$$QTFIx100$Where—Q is the quantity of input fuels referable to the production of electricity calculated in accordance with sub-paragraph (2).TFIis the CHP Total Fuel Input for the station specified on the current CHPQA certificate relating to the station at the time the quantity of the carbon price support rate commodity is brought onto, or arrives at, the CHPQA site.$

• (4) Apply the percentage calculated in accordance with sub-paragraph (3) to the quantity of carbon price support rate commodities brought onto, or arriving at, the CHPQA site.

Compulsory review of calculation

3

• (1) This paragraph applies where a person (“P”)—

• (a) has accounted for CCL on a deemed supply under paragraph 24B of the Act; and

• (b) the quantity of the carbon price support rate commodity that was the subject of the deemed supply has been calculated in accordance with paragraph 2 of this Schedule.

• (2) Where this paragraph applies P must review the correctness of that quantity—

• (a) in accordance with paragraphs 4 and 5; and

• (b) no later than a reconciliation day.

4

• (1) That correctness must be reviewed in relation to the CHP Total Fuel Input , the CHP Qualifying Heat Output, the CHP Qualifying Power Output, the qualifying electricity, the Mechanical Output and the CHP Total Power Output for the relevant reconciliation span.

• (2) In the case of a reconciliation span for an incompleted calendar year, treat the actual CHP Total Fuel Input , the CHP Qualifying Heat Output, the CHP Qualifying Power Output, the qualifying electricity, the Mechanical Output and the CHP Total Power Output as determined for the 12 month period preceding the relevant reconciliation day and as if that period was an Annual Operation.

• (3) For the purposes of paragraph 3(2) and this paragraph—

• (i) paragraph 9B of Schedule 1 to these Regulations has effect for the purposes of determining a reconciliation day and reconciliation span; and

• (ii) “incompleted calendar year” has the meaning given in that paragraph.

5

The review must properly take into account—

• (a) the quantities of carbon price support rate commodities that were the subject of deemed supplies; and

• (b) the quantities that ought to have been the subject of deemed supplies having regard to the actual CHP Total Fuel Input , CHP Qualifying Heat Output, CHP Qualifying Power Output, qualifying electricity, Mechanical Output and CHP Total Power Output for the station in question for the reconciliation span in which the commodities were supplied.

6

If the review determines that the quantities of carbon price support rate commodities that were the subject of deemed supplies was too little paragraphs 24C and 38A(2) of the Act apply accordingly.

7

If the review determines that the quantities of carbon price support rate commodities that were the subject of deemed supplies was too much P is entitled to a tax credit under Part II of these Regulations.