Green Deal and ECO the consumer view. February 2013

Transcription

1 Green Deal and ECO the consumer view February 2013

2 2 Why sponsor the NEA fuel poverty forums? Consumer Focus is the statutory watchdog for energy consumers We want to: help you to help consumers create opportunities to facilitate sharing of information and what works learn from the experiences of your clients, and use this to inform our work on energy policy

3 3 What do we do to help consumers? Consumer Focus provides a range of information, support and tools to help and empower consumers when they communicate with, or make decisions about, their electricity and/or gas supplier. interactive FAQ, your energy questions consumer facing leaflets letter templates for energy consumers (and some specifically for advice providers) Online helpfinder Information on switching energy supplier Information about energy supplier performance.

4 4 What do we do to help advisers? Consumer Focus supports advisers and frontline staff on the phone and on line: Username: Adviceprovider Password: Info4you Advanced version of your energy questions Adviser factsheets Consumer Community network Presentations Policy into Practice

5 What do we do to help advisers? Ask the adviser telephone support service Provides guidance to advice agencies dealing with postal or energy complaints on behalf of their clients Can advise on how best to challenge a supplier and details of relevant legislation Not a referral service allows advisers to retain case handling. 5

6 The Future of Consumer Focus In April 2013 Consumer Focus will become the Regulated Industries Unit focusing only on essential regulated markets mainly Energy and Postal Services In Autumn 2014 the RIU will transfer to Citizens Advice Consumer education services will transfer to Citizens Advice in April 2013 but the RIU will still run the Extra Help Unit Name?

7 Key areas covered in our annual plan We are currently consulting on the RIU workplan for 2013/14 -industries-unit-draft-work-programme-forconsultation 1. Understanding and tackling consumer disadvantage in key markets consumer vulnerability, energy affordability 2. Meeting the costs of infrastructure and renewal 3. Challenges of complex markets in a digital age

8 Green Deal and Affordable Warmth ECO

9 Consumer Focus and the Green Deal Statutory watchdog for consumers Promote the needs of energy consumers Balance needs of current and future consumer Why does energy efficiency matter? Research, consultation responses and advice to DECC and Green Deal industry forums Working with other consumer representatives, green groups and industry Consumer engagement and consumer protection

10 Marketing Energy Efficiency: What s in it for me? Case studies Mostly public sector - reflecting current market No silver bullet Lessons Promoting benefits Reducing barriers Marketing energy efficiency

11 Marketing Energy Efficiency: What s in it for us? Practitioner workshops York Birmingham London Short report builds on lessons from What s in it for me?

12 The Green Deal and ECO Moving from subsidised market to a consumer pays model, plus Energy Company Obligation for low-income and hard-to-treat The Green Deal Able to pay, pay and resources targeted where most needed Open the market to sell energy efficiency Experience of CERT and CESP The major challenge relates to consumers

13 Are the Green Deal and ECO a good deal for consumers? The Green Deal from a consumer perspective Consumer protection Consumer engagement and accessibility ECO Fuel poverty Costs of ECO Consumer engagement and accessibility

14 Benefits and barriers to energy efficiency Benefits Saving money A warmer, more comfortable home Living a greener life Value in the property market Barriers Not the owner Inconvenience Cost Awareness and interest Low trust in industry Complacency Housing stock

15 Benefits and barriers: The Green Deal Accreditation framework Financing tool Private rental sector? Cost and trust are barriers, but is no-upfront-cost enough? Where is the benefit? Green Deal incentives

16 Energy Company Obligation Affordable Warmth 350m/yr (25%) Carbon Saving 950 (75%) Carbon Emissions Reduction Obligation (CERO) 760m/yr (80%) Carbon Saving Communities (CSCO) 190m/yr (20% ) Rural safeguard 28.5m/yr (15%) Other (85%)

17 Fuel poverty resources in England: energy efficiency Source: ACE (2012), National fuel poverty budgets, supplier obligation funds pro rata for Eng only

18 Affordable Warmth who is eligible? Qualifying benefits Pension Credit Child Tax Credit (income 15,860 or below) Working Tax Credit (income is 15,860 or less)* Employment Support Allowance* Income Based Job Seekers Allowance* Income Support* *Extra conditions Disability premium, enhanced or severe disability premium Disabled Child Premium Child under 16 who resides in the household (or under 20 if in full time education) Pensioner premium, higher or enhanced pensioner premium Child Tax Credit which includes a disability or severe disability element

19 Affordable Warmth: measures Wide range of measures Cavity and loft Boiler replacement/repair Solid wall and hard-to-treat cavity wall insulation Micro-generation Air-source heat pumps Solar panels if electrically heated Voluntary supplier agreement

20 Information on eligability Energy Saving Advice Service (ESAS)

21 ECO referrals 1/3 Call to ESAS Questions and verification Which supplier? Current - If they have signed voluntary agreement and customer agrees to be referred Or choice of other suppliers - independent advice from ESAS if required

22 ECO referrals 2/3 Minimum package of assistance determined by a voluntary agreement includes: Attempting to contact the consumer Phone/ s then letter Assessment of the property Bill assistance (e.g. tariff, WHD) Heating and basic insulation measures, if cost effective and appropriate for the property If not possible, a minor measure, such as draft proofing or pipework insulation

23 ECO referrals 3/3 Establish contact with the customer within 5 working days of referral An initial survey date within 10 working days of establishing contact Install: heating measures within 20 working days from the initial survey cavity wall/loft insulation within 60 working days from the initial survey

24 Boiler provision 1/2 Affordable Warmth who is eligible?

25 Boiler provision 2/2 In other words, The boiler does not need to be broken for it to be replaced If the boiler cannot be repaired so that it works at an efficient level then it should be replaced. if an efficient boiler is broken and cannot be repaired economically in a way which enables it to function efficiently it should be replaced.

26 Consumer protection in Affordable Warmth ECO Lower than for customers of Green Deal and Warm Front Warm Front mandated two-years of boiler service, three-year boiler warrantees and consumer satisfaction procedures These are not required under ECO. No independent scrutiny as with Warm Front, scrutiny of the voluntary agreement between DECC and the energy suppliers.

27 Accessibility of Green Deal and ECO Many fuel poor consumers will not be eligible for Affordable Warmth ECO Green Deal credit check, as well as check for energy supply debt PPM customers Park homes Private tenants

28 Consumer protection in the Green Deal Misselling - not a government scheme Comparability of quotes Savings rates Warrantees

29 Private tenants and the energy market Recent CF research Poorest housing stock 20% of private tenants described their home as cold or very cold more than other tenures The main reasons given were poor insulation (51%) or unable to afford to heat the property (31%)

30 Private tenants and energy efficiency 23% of all private tenants questioned had asked their landlord to make energy efficiency improvements 65% got the improvements they asked for 18% with a cold property would consider energy efficiency improvements 32% were aware that they could apply for energy efficiency grants themselves Only 19% of those aware of grants actually applied for one

31 Accessibility for private tenants Need multiple consents, and may find work is blocked due to the need to apply the Green Deal charge to individuals energy bills, where it may be more appropriate to apply it as part of the service charge. Private rental sector regulations 2016 Reasonable request 2018 Illegal to let F- and G-rated properties

32 Costs of ECO ECO will run for ten years but review after 27 months Funded through consumers energy bills More transparency than CERT/CESP DECC impact assessment: per customer per year. But

33 Costs of ECO Underestimated costs? Cost of lead generation Uptake of Green Deal finance Appetite for solid wall insulation Support in Scotland and Wales

34 Costs of ECO Institute for Public Policy Research: ECO could add up to 116 Fuel Poverty Action Group: Families may have to pay up to 125 extra NERA (for Energy UK): ECO will cost the industry 2.3bn - 95 per household Concerns about fuel poverty

35 Costs for ECO: Asks for DECC Review costs after a year Protect fuel poverty funding Work with DWP/HMRC on data-matching Better promotion Government funding for fuel poverty (Energy Bill Revolution)

36 @CFenergy Consumer Focus t Victoria House, f Southampton Row contact@consumerfocus.org.uk London WC1B 4AD

37 Unravelling ECO Justine Biggs Business Development Manager Phil Brown Relationship Development Manager

38 What is ECO? ECO (Energy Company Obligation) is a new programme designed to tackle fuel poverty and reduce Britain s domestic energy consumption ECO takes over as the programme designed to address energy efficiency in the domestic sector. It comprises of 3 separate elements: - Carbon Emissions Reduction Obligation (CERO) - Carbon Saving Communities Obligation (CSCO) - Home Heating Cost Reduction Obligation (HHCRO) (Formerly AW). 2

39 The 3 elements of ECO HHCRO Home Heating Cost Reduction Obligation Target audience is the Super Priority Group ( SPG) customers who live in privately owned properties and tenants with private landlords. Carbon Saving Communities Obligation CSCO Target audience is communities identified as having a high level of vulnerable households. These are areas designated by postcodes supplied by DECC (Department of Energy and Climate Change) 15% of the total CSCO target must be made up of the rural element which has dedicated rural postcodes supplied by DECC. CERO. Carbon Emissions Reduction Obligation Target audience is Solid Wall or HTT cavities (Hard to Treat). These are known as gateway measures and are aimed across all tenure that has not received funding under CSCO or HHCRO Here the obligated party will be supporting Green Deal. 3

40 ECO Measures Boiler Replacements HHCRO Boiler Repairs CWI LI CWI (HTT) DP CSCO EWI District Heat CERO

41 DECC financial impact assessment DECC Impact assessment states total spend 1.3Billion pa NERA Impact Assessment believes likely to be > 2.3Billionpa Why? 1) DECC assumes 3 rd party (Green Deal) input of 43% for CERO/CSCO 2) DECC assumes that broken boilers are replaced with direct acting electricity to heat households 3) DECC assumes that two thirds of all ECO installations will be in NON-gas heated properties 5

42 Link to Green Deal (the purpose of ECO) The statutory instrument clearly sets out ECOs role in the Carbon Emissions reduction element. This role is to support the Green Deal Golden rule funding mechanism Where Golden Rule savings do not meet the capital cost of the measure ECO will provide top up to allow measure to proceed Green Deal Golden Rule first, ECO second. Hence 43% from funding source NOT ECO. 6

43 Impact of fuel type 7

44 CESP changes to ECO CESP Portfolio of measures around SWI Strict Geographic Areas Deemed carbon savings Multiple Uplifts on true carbon saved Ofgem reporting at project end 3 year programme ECO Carbon Savings Insulation only with gateway measures SWI and HTT CWI No geographic constraints RDSAP Carbon Scores (effected by heating) No Uplifts allowed 30 day notification ongoing 2.25 year programme 8

45 Considerations to achieve carbon maximisation Thermally inefficient properties Multi measures Un refurbished properties High Density Levels Non Gas heated properties Within LSOAs Larger Properties Hard to Treat Cavity Walls (Medium rise) Potential for 3 rd party contribution 9

46 Home Heating Cost Reduction Obligation (HHCRO)

47 What is HHCRO? The Home Heating Cost Reduction Obligation (previously known as Affordable Warmth) is designed to make heating more affordable for people on a low income or who meet certain benefit criteria. E.ON are able to fully fund energy saving home improvements for qualifying households. These improvements should make homes warmer and could reduce heating bills. We will use our most cost effective measures that create the best savings for the customer 11

48 What can we offer? We ll visit eligible households and let them know which energy saving home improvements are available and will make the most difference in their home. We predominately offer: Home insulation including cavity wall insulation, loft insulation and draught proofing. Replacement of broken or inefficient boilers (efficiency rating of C-G) with a brand new A rated boiler Repair of more efficient boilers (efficiency rating A-B) but we are not an emergency repair service 12

49 How do we recommend measures? Before we begin work on a property, it would be assessed using the approved RdSAP (Reduced data Standard Assessment Procedure) software. We refer to this as an EPR - Energy Performance Rating We would measure the rating before and after installation of measures to establish the difference that completing the measures has made. We then register the energy savings for the property against our ECO targets 13

50 Who can benefit from HHCRO? Firstly all eligible customers must own their own home or rent from a private landlord Secondly, a member of the household will need to be in receipt of qualifying benefits to have access to the fully funded HHCRO measures. 14

51 What are the Qualifying Benefit Criteria? Stand Alone Benefit State Pension Credit Child Tax Credit, relevant income below 15,860 One of these 2 benefits would qualify the property for measures under HHCRO. You would not need to use the combination benefit criteria on the following slides, once one of these had been evidenced OR 15

52 Combination Benefit 1 1) Income-based job seeker s allowance 2) Income-related employment and support allowance 3) Income support Plus one of the below A) Disabled child premium B) Has parental responsibility for a child under 16 that lives at the property C) Has parental responsibility for a child who is 16 or over but under 20 and in full-time education other than higher education that lives at the property D) Pension premium, higher pension premium or enhanced pension premium E) In receipt of child tax credit which includes a disability or severe disability element F) Disability premium, enhanced disability premium or severe disability premium G) Receiving a work related activity or support component (only with Number 2) 16

53 Combination Benefit 2 1) Working Tax Credit relevant income below 15,860 Plus one of the below A) Has parental responsibility for a child under 16 that lives at the property B) Has parental responsibility for a child who is 16 or over but under 20 and in full-time education other than higher education that lives at the property C) In receipt of a disabled worker element or severe disability element D) Aged 60 or over 17

54 How will we confirm the correct benefits are received? We will use our dedicated pre-qualifying team to obtain information from the customers on the receipt of qualifying benefits Assessment of the customers benefit criteria will then be checked by assessors, who will visit the home to assess the work needed and establish that the benefit criteria has been met. 18

55 The customer journey Customer Lead Pre-qualify Assess Complete Install Customer Agrees 19

56 Customer Confidence This is an opportunity to help establish confidence and trust, which every organisation can benefit from. Building positive and strong relationships with our customers, and helping them while we do. 20

57 Why choose E.ON? Working together we can help to reduce fuel poverty and support the families and communities who need it most. Expertise: We have our own team of experts who are experienced in liaising with tenants and managing sites. We re here if you just need some advice from time to time or need us to take a bigger role. We re here to help. Confidence: Helping families and communities save energy is important to us. We met our targets under previous energy saving schemes and have saved millions of tonnes of carbon whilst making hundreds of thousands of homes easier to heat. We re already working hard under ECO. Overall Service: In 2012 Uswitch named us as the number one supplier for overall customer satisfaction. We were also recognised as the number one supplier for energy efficiency. 21

58 Act now! ECO period is January 2013 to March 2015 To allow for formal completion most will need projects completed by December Only 24 months in total, two has already disappeared! Think ECO - Think E.ON 22

59 23 Thank you

60 Fuel Debt Advice Update

61 Topics Welfare Reform Highlights! Ofgem Retail Market Review Ofgem Vulnerable Consumer Strategy DECC Better deal for energy consumers Collective Switching

62 Welfare Reform Highlights! Universal Credit Paid monthly (in arrears) Bedroom Tax 1% cap on benefit increases Changes to Council Tax support Social Fund transferred to local authority

63 Retail Market Review Ofgem s final proposal for reforms due to come into force in Summer 2013 are outlined under the headings Simpler Choices Clearer Information Fairer Treatment

64 SIMPLER CHOICES Limit on number of tariffs each supplier can offer Simple, standard choices across each tariff e.g. on whether to pay by direct debit Removal of complex two-tier tariffs Suppliers required to inform customers of their cheapest deal Suppliers not allowed to keep customers on dead tariffs Standard way of describing the cost of tariffs to help customers compare Clear rules relating to collective switching

65 CLEARER INFORMATION Bills to include basic, easy to understand information on tariff and energy use, show supplier s cheapest tariff and how much can be saved by moving to it Annual statement to provide information to help customers understand their current tariff and compare with those offered by other suppliers Price increase notifications will be easier to understand and provide information on cheapest tariffs to help customers decide whether to switch and/or manage the increase. End of fixed term notices will give a comparison between do nothing and alternative tariff options.

66 FAIRER TREATMENT Suppliers must listen to the views of their customers and take their needs into account. If not, they could be fined Suppliers will be required to meet Standards of Conduct; to treat customers fairly and ensure they are meeting consumer s needs. Working to ensure that customers have access to, and confidence in, intermediaries and to facilitate collective switching New rules for terms and conditions of fixed term deals including a ban on automatically rolling people onto another fixed term deal without their consent.

67 TIMETABLE ACTIVITY TIMESCALE Statutory consultation published End March 2013 Stakeholder response 1 month Decision whether to implement reforms published May 2013 Licence holders, trade bodies and Consumer 56 days Focus decision whether to appeal to Competition Commission If no appeal, reforms, starting with enforceable standards of conduct, to take effect Summer 2013 If no appeal, other reforms due to be in place Winter

68 MORE INFORMATION RMR% pdf ts1/factsheet%20115%20getting%20the%20best%2 0deal_WEB.pdf

69 Vulnerable Consumer Strategy The proposed strategy builds on Ofgem s Social Action Strategy and links in with the ongoing Retail Market Review. The proposed new strategy includes the following themes:

70 Strategic Themes Ensuring Ofgem s work takes account of vulnerability and is informed by research and insight Innovative provision of advice and support Promotion of best practice among suppliers and distributors Targeted and effective regulatory obligations Work with others to influence wider policy impacting on vulnerability

71 Within the new strategic themes, Ofgem will also be looking at innovative provision of advice and support which they hope will include: Calls for a more innovative and supportive approach for those in vulnerable circumstances Face-to-face support identified as important for many in vulnerable circumstances Identify engagement and empowerment partners Facilitate and develop guidance on collective switching for disengaged and vulnerable households

72 The proposed 2013 workplan hopes to include work in a number of key areas including How the potential benefits of collective switching can be extended to cover vulnerable customers. A review of the Priority Services Register, the review will look at improving the effectiveness of the registers of suppliers and consider how the information can be better used and shared across the industry. The establishment of a Consumer Vulnerability Network to help identify issues at an early stage

73 Better deal for energy consumers DECC discussion document. Consultation was open until 4 th Jan DECC currently analysing your responses The purpose of the document was to seek views on proposals to ensure consumers get the cheapest energy tariffs. To date DECC have focused on four key areas Clearer information to help consumers onto the best tariffs Helping consumers make their homes more energy efficient additional direct help (through the Warm Home Discount Scheme) Raising awareness and putting people in touch with sources of help

74 The discussion document looked at Simpler tariffs and the cheapest tariff for consumers Clearer information More help for vulnerable consumers Helping you switch Facilitating collective purchasing and switching Third party intermediaries

75 Collective Switching Collective switching is where a third party actively negotiates a better tariff on behalf of the consumers they represent. Switching companies (Which?) approach suppliers to get a better price called a reverse auction

76 Consumers have experienced large increases in their energy bills with the average annual bill increasing by 90 over the last 12 months. Individual households switching has gradually declined and collective switching is seen as an avenue to address this issue.

77 DEEC supports collective purchasing and switching and provided a 5m fund Cheaper Energy Together for local authorities and third sector organisations A number of councils have taken up the option of collective switching and in E Mids DECC funding totalling 117,700 was awarded to Nottingham CC and Corby BC.

78 MORE INFORMATION

79 NEA Fuel Poverty Forum East Midlands 27 th February, 2013

80 Ofgem reporting: Theme 2 Eradicating Fuel Poverty and Protecting vulnerable Customers Contribution to sustainable development: Modest reduction in fuel poverty 4.75 million fuel poor households Switching increase Among higher socio-economic groups Disconnections reducing

81 We (and they) are all in it together Domestic energy prices 2013 Supplier Current bill New bill Effective from 3,300 kwh of electricity and 16,500 kwh of gas on a standard dual fuel tariff. British Gas 1,260 1,336 November EDF Energy 1,202 1,332 December E.ON 1,260 1,370 January npower 1,244 1,356 November ScottishPower 1,349 1,368 December SSE 1,235 1,354 October ,258 1,352 Average

82 Latest excess winter death figures Estimated 24,000 excess winter deaths in England and Wales in 2011/12 an 8% reduction from 10/11. As in previous years, higher in females. Between 2010/11 and 2011/12 male excess winter deaths decreased from 11,270 to 10,700, and female deaths from 14,810 to 13,300. The majority occurred among those aged 75 and over; there were 19,500 excess winter deaths in this age group in 2011/12 compared with 4,500 in the under 75-year-olds. The excess winter mortality index was highest in London in 2011/12. Source ONS, Nov So far, November and December 2012 mortality rates are lower than previous years 2011.

83 Housing stocktake Homes failing Decent Homes Standard on Thermal Comfort England 2011 Tenure Number of % of homes homes Owner-occupied 1,127, % Private rented 611, % Local authority 88, % Housing 157, % association All tenures 1,984, %

84 Housing stocktake (2) Housing Health and Safety Rating System Category 1 Excess Cold Hazards by tenure Tenure Excess Cold Hazard (%) All dwellings in tenure group Owner occupied 7.6% 14,860,000 Private rented 10.7% 3,706,000 Local authority 3.6% 1,801,000 Housing 1.8% 2,018,000 association All dwellings 7.2% 22,388,000

85 Green Deal and ECO update A Guardian survey of the 24 companies listed as domestic "assessors" for the scheme found that, of the 18 that were contactable, five will charge between 95 and 150 for an upfront assessment fee. Eleven were not able to answer the question, one (Mark Group) plans to offer the assessment for free and one company had been mistakenly listed as a provider on the government's website.

86 ECO and Equity Two recent reports suggestion the cost of ECO to the Government (the billpayer) will be higher than expected. Energy UK say 94 p/a on the bills rather than 53. IPPR say poor targeting is a big factor and more area-based approaches would help.

87 Green Deal Inquiry Committee on Energy and Climate Change Inquiry into Green Deal. What are the best indicators of progress, and how measure e.g: Take-up Accessibility Energy/carbon savings Closed, but interesting results.

88 Clearing up the Eton Mess Retail Market Review: Ofgem s consultation on legislating so that energy companies have to give the lowest possible tariff. Main proposals: Four core tariffs per fuel The core tariffs must include one standard variable tariff and one fixed rate tariff The form of the other two tariffs are at the discretion of energy suppliers but may, for example, include a green tariff Suppliers will offer a single price for each tariff although discounts will be permitted based on dual-fuel arrangements or lower-cost payment methods Encouraging collective switching

89 From the side-lines Labour s Real Energy Market Review Abolish Ofgem and substitute a tough new energy watchdog with the power to force energy companies to pass on price cuts when wholesale costs fall Require energy companies to pool the power they generate and make it available to any retailer to open up the market and make it more transparent Require energy companies to put all customers aged over 75 on the company s cheapest tariff thereby saving up to 4 million pensioners up to 200 on their annual energy bills

90 CERTifiably SPG? CERT compliance for SPG targets varied from 12.2% to 62%. Ofgem to the rescue! Suppliers can automatically attribute 32% of their social housing work to SPG because trend shows 33% of social housing tenants will be on a qualifying benefit. Ofgem s approach is pragmatic and to some extent understandable, but it masks a failure on the part of suppliers to identify and assist the most vulnerable and financially disadvantaged energy consumers.

91 Just get E.on with it!

92 DECC Local Authority Competition Awards Lead partner Funds awarded Leicester Council 120,000 Derbyshire City Council and partners 2,507,000 Hinckley and Bosworth Borough 3,092,000 Council and partners Northampton Borough Council 569,601 and partners Milton Keynes Council 310,450 Nottingham City Council 52,000 Corby Borough Council 112,500

93 Other inquiries The Energy and Climate Change Committee has announced an inquiry into domestic energy prices, energy supplier profits and fuel poverty. Written evidence is to be submitted by February Think we know anecdotally facts and figures useful. Perhaps skirts the issue of prices and profits? Energy Efficiency: Empowering Consumers, Encouraging Growth Further investigation into areas of concern Guidance published for consumers Compliance guidance reminders to companies

94 Sound advice but deaf ears? FPAG 10 th Annual Reportwww.decc.gov.uk HECA

95 Cold costs, warmth saves Cold, damp, thermally inefficient houses which people cannot afford to heat sufficiently to protect their health are a peculiarly British public health scandal. Age UK has calculated that the estimated cost to the NHS in England arising just from cold homes is around 1.36 billion per year.

96 Jenny Saunders OBE As chief executive of NEA her leadership, energy and dedication have ensured that the plight of those unable to afford to keep their homes warm does not go unnoticed and that action is taken to help.

97 Interesting reports Age UK, The cost of cold: Why we need to protect the health of older people in winter, IPPR, Energy efficiency: who pays and who benefits? 2012 EC Joint research Centre, Heating and cooling: Best available technologies in Europe, 2012 Institute for Sustainability, Retrofit Insights, 2012 NEA training