Tuesday, 19 August 2014

Hard pressed households face a very tough winter as support to install energy efficiency measures dries up

Ofgem’s latest ECO Compliance Update published on Friday 15th August 2014  makes very worrying reading for householders intending to apply for a free or heavily subsidised boiler or home insulation through the ECO scheme this Winter.  The Update which contains details of the number of energy efficiency measures that have been installed by energy companies under ECO and progress made  towards the ECO targets showed that two of the targets have already been met, some 9 months ahead of the schemes end date meaning that in theory no more measures now need to be carried out.

The current ECO runs from January 2013 to end March 2015 and the Ofgem ECO Update reported that at the end of June 2014,  based on the number of measures notified to Ofgem by energy companies the HHCRO target which provides free boilers and home insulation to vulnerable and fuel poor households was 97% complete.  The CERO target which provides free or subsidised solid wall, cavity wall and loft insulation was 55% complete against the original CERO target however, when the 33% cut in the original CERO target which was announced by Government on 22nd July 14 and the carryover of excess carbon savings of around 15% from the previous scheme are factored in, then the overall CERO target has already been exceeded.

This comes on top of the recent closure of the Governments Green Deal Home Improvement Fund and means that hard pressed households are now likely to find it very difficult to obtain the support they were expecting and needing to install heating and insulation measures this winter to heat their homes and reduce their fuel bills.

What can be done to improve the situation?

ECO – in its response to the consultation The Future of the Energy Company Obligation published on 22nd July 2014, DECC acknowledged that the changes to the current ECO were likely to result in greater cost savings for energy companies than were originally expected and that they would expect energy companies to ensure that consumers benefitted from these extra cost savings in a concrete way.  Subsequently, the Association for the Conservation of Energy has reported that the additional cost saving could be as much as £249m in the current financial year.

Therefore, we would urge Government and the energy companies to agree that these excess savings should be invested in the provision of additional energy efficiency measures this Winter through more ECO activity and/or by directing the funding to the Green Deal Home Improvement Fund to enable it to reopen.

GDHIF – the GDHIF scheme closed unexpectedly on 24th July following a huge surge in uptake which saw around £70m of vouchers applied for in just a few days.  Since the scheme closure, there have been numerous reports of speculative selling and phantom vouchers with suggestions that a  large proportion of the vouchers applied for will not be redeemed in practice.   It is therefore vital that Government verifies all voucher applications and identifies the number of households that are unlikely to proceed with the works and redeem the vouchers as a matter of urgency.  This will identify how much of the £120m that has been applied for is unlikely to be spent and enable the scheme to be reopened as soon as possible.

In addition, we would urge Government to seriously consider injecting additional funds into the GDHIF at this point in time to help hard pressed households during what is expected to be a very difficult Winter.