Memorandum submitted by the LGA
The LGA is proposing a council-led programme
to ensure every home in the country is insulated, reducing energy
bills in 10 million homes by on average £200 a year, lifting
500,000 out of fuel poverty and cutting household carbon emissions
by 20%.
The programme would be paid for by energy suppliers
paying an annual charge of £500 million a year to match pound
for pound the existing contributions made by householders through
the Carbon Emissions Reduction Target (CERT) scheme. Ofgem would
ensure that these extra costs would not be passed on to consumers.
PROBLEMS WITH
THE WAY
ENERGY SUPPLIERS
ARE REGULATED
Our new report "Switch off, switched
on" has identified three main faults with the current
way that energy suppliers are regulated to cut carbon emissions
and tackle fuel poverty through the CERT scheme:
— Energy suppliers spend huge amounts
of money trying to market and advertise a scheme nobody has heard
of often failing to reach the householders who need it most.
— Companies often abruptly end programmes
as soon as targets have been met—regardless of local need.
— There is little public understanding
or scrutiny of the scheme—even though it is householders'
money being spent.
Regulations are trying to force energy suppliers
to do something that goes against their core business of selling
energy. Instead we propose that a duty should be placed on them
to work with councils who would be able to lead on offering households
free insulation and are used to dealing with social and environmental
objectives.
HOW COUNCILS
CAN HELP
HOUSEHOLDS REDUCE
ENERGY CONSUMPTION
AND TACKLE
FUEL POVERTY
— Councils know their own area and
know which households are most likely to suffer from fuel poverty
and would be trusted to help the elderly empty their lofts to
be insulated.
— A one off payment to properly insulate
a home is a much more efficient way to cut fuel poverty than giving
money each year to help pay for extra fuel use.
— Councils can operate on a larger
scale offering free insulation to every household in a neighbourhood.
— Councils are democratically elected
and can be held accountable for promoting energy efficiency and
tackling fuel poverty.
— We estimate that if councils were
able to insulate every household they could take half a million
people out of fuel poverty.
HOW INSULATING
EVERY HOME
AND TACKLING
FUEL POVERTY
COULD BE
PAID FOR
We are calling for energy companies to match
the average £35 per household, contribution that customers
already pay towards the CERT scheme. This could raise an extra
£500 million a year and if they worked with councils to achieve
economies of scale they would be able to ensure every household
in the country is properly insulated over a three year period.
It would have to be Ofgem's role to ensure that
these costs are not just passed on to the consumers. The CERT
scheme will be reformed for another three year period in 2011,
but regulations can be put in place straight away to ensure energy
suppliers work with councils to promote carbon reduction and tackle
fuel poverty more effectively.
I have included with this submission our report
"Switch off, switched on" which sets out in detail
our proposals for how energy bills could be reduced by reforming
the CERTs scheme.
25 April 2008
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