Ofgem investigates major energy companies over missed efficiency targets
The energy regulator has announced that British Gas, Scottish Power and SSE are being investigated over their failure to meet Government energy efficiency targets.
Energy regulator Ofgem has revealed that British Gas, Scottish Power and SSE are among six companies to be investigated for failing to meet Government home improvement targets.
The Carbon Emissions Reduction Target (CERT) and Community Energy Saving Programme (CESP) were introduced in 2008 by the then-Labour Government. To meet their targets under these schemes, energy companies had to install energy efficiency measures in a certain number of UK homes. Many of these were offered free of charge, although the costs were added to the bills of every customer of each company.
Those schemes ended in December, replaced by the current Government’s much-trumpeted Green Deal, which offers a system of loans to pay for energy efficiency improvements. These are repaid via a household’s energy bills.
Missed targets
Ofgem says 99% of the overall CERT target was achieved, resulting in over six million energy efficiency improvements being installed.
British Gas only delivered 98% of its main CERT target and 95% of its insulation target. This was despite a high-profile last minute advertising campaign designed to raise awareness of its offer. More shockingly, it only delivered 62% of its CESP target.
Meanwhile, SSE missed its CERT main target by 1.5% and insulation target by just 0.1%. But it only achieved 90% of its CESP target. SSE was recently fined a record £10.5 million by Ofgem for mis-selling.
Scottish Power achieved its CERT targets but only delivered 70% of its CESP target.
The other three companies under investigation are Drax, GDF Suez/IPM and Intergen.
The CESP scheme was specifically targeted at low-income areas of Great Britain.
What happens now?
Ofgem says some of these companies continued to offer the energy efficiency installations after the December deadline, at its suggestion.
It’s now looking at evidence submitted by the offending companies about their programmes and any extended periods of installations after the deadline. It will then decide on any enforcement action and possible fines.
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Last year I looked into this, I found that our house did not comply with the rules on four counts. I cannot remember what they all were but the killer was that we lived way up in the north of Scotland in a (mostly) stone built detached house (half of which is an extension that is well insulated). As far as I was concerned the whole thing was a big con.
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Green deal is lame duck - 7% interest on a loan that goes on your bills which is supposed to be connected to the dwelling. The % rate will probably go up in time. The returns on green deal are only good for 12 months and you may have to pay back the loan when you sell - buyers will not like taking on another s debt. Some of these green deal loans are supplied by the main utility companies and who wants that when they are getting all these miss selling faults. Many of these items will be a 3rd more expensive than going to an independent supplier. Its just another loan. I suggest scrapping VAT on these improvements then you'll get take up..
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In order to give the consumer incentive the government would have to raise more tax across the board and give it out to willing consumers or raise tax progressively based on energy ratings (watch this space), so it looks much better to make the evil energy companies (who deliver nearly the cheapest energy in Europe) pay for it even though they just pass the cost on. However, this latter solution is probably the cheapest, because they can do it in bulk and have incentive to so they stay competitive in the market.
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05 May 2013